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Copley News Service, July 11, 2001, Wednesday, State and regional, 406
????words, Davis firm on demand for $8.9 billion refund, Ed Mendel, SACRAMENTO Los Angeles Times, July 11, 2001 Wednesday, Home Edition, Page 12, 749 ????words, THE NATION; ; Referee Shift Seen in Refund Talks; Power: Participants ????say mediator was swayed by arguments that California estimates were based on ????faulty analysis., RICARDO ALONSO-ZALDIVAR, TIMES STAFF WRITER, WASHINGTON Los Angeles Times, July 11, 2001 Wednesday, Home Edition, Page 2, 325 words ????, California; ; Calpine to Buy More Natural Gas Reserves; Energy: The power ????producer is set to purchase wells in Texas and New Mexico for $355 million ????plus debt., From Bloomberg News Los Angeles Times, July 11, 2001 Wednesday, Home Edition, Page 2, 574 words ????, California; ; Edison's Finances Fare Better; Energy: After selling some ????assets, the company appears to be back on track. But it says the future of ????its utility is in the Legislature's hands., JERRY HIRSCH, TIMES STAFF WRITER The New York Times, July 11, 2001, Wednesday, Late Edition - Final, Section ????A; Page 1; Column 3; National Desk, 1519 words, Calls for Change in an ????Ancient Occupation, By EVELYN NIEVES, MOJAVE, Calif. The San Francisco Chronicle, JULY 11, 2001, WEDNESDAY,, FINAL EDITION, ????NEWS;, Pg. A3, 512 words, Governor threatens to sue utilities for refunds; ????Davis says California won't settle for $1 billion, Mark Martin, Sacramento The Washington Post, July 11, 2001, Wednesday, Final Edition, A SECTION; ????Pg. A02, 934 words, GOP Speeds Action on Limited Energy Bills, Peter Behr ????and Mike Allen, Washington Post Staff Writers Business Wire, July 10, 2001, Tuesday, 1003 words, Texas to Avoid ????California Electricity Shortage; New Customer Brochure Explains Differences ????in the Texas and California Electricity Markets, AUSTIN, Texas, July 10, ????2001 CNBC/Dow Jones - Business Video, CNBC/DOW JONES BUSINESS VIDEO, July 10, ????2001 Tuesday, Transcript # 071001cb.y50, Business, 1419 words, The Shaw ????Group - President & CEO - Interview, James Bernard, John Manley, Mark Hianes Contra Costa Times, July 10, 2001, Tuesday, CC-POWERGRID, 938 words, ????Analysts: Overloaded California Grid Can't Handle High Demand, New Plants, ????By Rick Jurgens Copley News Service, July 10, 2001, Tuesday, Commentary, 530 words, Copley ????Editorial Service The Houston Chronicle, July 10, 2001, Tuesday, 3 STAR EDITION, A;, Pg. 1, ????921 words, California to get plan for refunds; Officials celebrate judge's ????proposition, DAVID IVANOVICH, LAURA GOLDBERG, WASHINGTON, Utility Rates National Public Radio (NPR), Morning Edition (11:00 AM AM ET) - NPR, July ????10, 2001 Tuesday, 1289 words, Officials in California fail to reach ????settlement over the state's demand for more than $8 billion in refunds to ????electricity customers, BOB EDWARDS, SCOTT HORSLEY The News Tribune, July 10, 2001, Tuesday, South Sound; Pg. D1, 405 words, ????No energy refunds foreseen for California ; Power: Judge rules state is owed ????up to a billion dollars, but owes suppliers more than that, Mark Sherman; ????The Associated Press Copyright 2001 Copley News Service Copley News Service July 11, 2001, Wednesday SECTION: State and regional LENGTH: 406 words HEADLINE: Davis firm on demand for $8.9 billion refund BYLINE: Ed Mendel DATELINE: SACRAMENTO BODY: ??Gov. Gray Davis had a tough message for federal regulators yesterday after the failure of settlement talks in California's bid to get an $8.9 billion refund from electricity suppliers: ''See you in court.'' ??The governor said California will seek a full $8.9 billion refund for electricity overcharges, even if federal regulators award the maximum refund of $5.4 billion allowed under their guidelines. ??''Our message is just order what you are going to order,'' Davis said of the Federal Energy Regulatory Commission. ''We believe you should order $8.9 billion. But you order what you think is fair. We will take what you order, then we will see you in court.'' ??Davis, joined by his negotiating team, made the remarks at a news conference a day after two weeks of closed-door talks with suppliers in Washington failed to reach an agreement. ??An administrative law judge made a recommendation to the regulatory commission that Davis' top negotiator, Michael Kahn, chairman of the California Independent System Operator, expects to result in a refund of more than $1 billion. ??Davis said that a revealing decision will be made by the commission, which he hopes has embarked on a ''new path'' with the appointment by President Bush of two new members, Pat Wood of Texas and Nora Brownell of Pennsylvania. ??''Are they on the side of consumers, as the federal power act envisions them being,'' Davis asked, ''or are they just there to do the industry's bidding, as they have so often in the past?'' ??Kahn said rules adopted by FERC cut off the refund period at last October, trimming $3 billion from the $8.9 billion overcharge claimed by California dating to May 2000. ??He said FERC has no jurisdiction over municipal utilities, such as the Los Angeles Department of Water and Power, that sold power to the state. The municipal districts overcharged the state by about $600 million, according to Kahn. ??As a result, he said, the maximum refund that FERC could order for California is about $5.4 billion. ??''We made it clear to everyone that if we did not settle for $8.9 billion, we would seek redress in court for the remainder of the money above $5.4 billion,'' Kahn said. ??Calpine of San Jose and several other generators have expressed interest in the state's offer to negotiate one-on-one with the state while the federal regulators consider their decision, Kahn said. ??WAGNER-CNS-SD-07-10-01 2114PST LOAD-DATE: July 11, 2001 ??????????????????????????????4 of 54 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ????????????????????July 11, 2001 Wednesday ?Home Edition SECTION: Part A; Part 1; Page 12; National Desk LENGTH: 749 words HEADLINE: THE NATION; ; Referee Shift Seen in Refund Talks; Power: Participants say mediator was swayed by arguments that California estimates were based on faulty analysis. BYLINE: RICARDO ALONSO-ZALDIVAR, TIMES STAFF WRITER DATELINE: WASHINGTON BODY: ??For the better part of 15 days of closed-door negotiations, the federal mediator in California's price-gouging case bandied about the possible dimensions of a settlement. ??Curtis L. Wagner Jr. went as high as $4.5 billion, fully half of what California said it had been overcharged by out-of-state electricity suppliers. ??But Wagner got no takers for that figure. And in the end, when talks ended Monday with no deal between the state and the energy generators, he said publicly that $1 billion was closer to the truth. ??Participants in the talks, speaking on condition that they would not be identified, said Wagner appeared to have been persuaded by the power suppliers that California's $8.9-billion overcharge estimate was based on unreliable economic analysis. ??The state's analysis "is fatally flawed and cannot be used to . . . determine overcharges or refunds," William Tabors, an MIT economist retained by one of the companies, said in an affidavit that is part of a transcript released by the judge. ??"I certainly think Tabors was very persuasive," said an industry lawyer. ??By contrast, at another point, Wagner questioned whether California regulatory agencies were truly independent of Gov. Gray Davis, saying their representatives to the talks might as well put on "clown suits." ??Now the issue is about to move to the governing board of the Federal Energy Regulatory Commission, which had given Wagner the job of trying to broker a settlement. The California side will have one more chance to make its case. But it will have to go back to its spreadsheets and generate numbers that can withstand scrutiny. ??Wagner is to send his formal recommendation to the FERC board in a week, and the board is expected to hold a hearing on how to calculate a refund before finally deciding whether California is owed one. ??California's delegation was disappointed by what it perceived as a shift in the mediator's sentiments during the two weeks of talks. "For [Wagner] to do what he did was a 180-degree turn," said a participant familiar with the delegation. ??Clues to the arguments that swayed the judge can be found in a transcript he released of this Sunday's session, the only portion of the deliberations that has been made public. ??During his public comments at the end of the talks Monday, Wagner echoed some of the technical points that Tabors, the industry economist from MIT, made in the transcript. ??California's delegation was headed by San Francisco lawyer Michael Kahn, chairman of Cal-ISO, the California Independent Systems Operator, which runs the state's electricity grid. An industry lawyer said the decision to have Kahn, who is a political supporter of the governor but who has no experience with FERC, head the delegation may have hurt the state. ??But a source close to the Californians said Kahn was an effective leader. "We were better served by the fact that we didn't have a FERC lawyer," said the source. ??At the end of the first week of negotiations, Wagner delivered a tongue-lashing to all sides, questioning the political independence of the Californians but also growling at the generators. He warned the companies that they might be ordered to refund "substantially more" than $2 billion. ??On July 2, Wagner told the California delegation he was disappointed with the offers he had received from the generators. Later, he revealed they added up to $670 million. That total rose only $46 million by the conclusion of the negotiations. ??The next day, Wagner floated a possible deal: $2.5 billion in cash payments and $2 billion in discounts on long-term power contracts. ??The Californians were intrigued. "When you're talking about $4.5 billion, you've got to sit down and start thinking about it," said a source close to the delegation. ??An industry participant sized it up differently. "That proposal was floated out one day and never really went anywhere," he said. "No one seemed interested." ??From there the talks bounced up and down before finally ending on a decidedly down note. ??On Sunday, Wagner scheduled a session to go over once more how California had estimated that it had been overcharged by $8.9 billion. Once again, he came away unconvinced. But this time there was no next time: On Monday, Wagner ended the talks and prepared to make his recommendation to the FERC board. ??* ??RELATED STORY ??PG&E ruling: A judge bars ratepayers group from bankruptcy proceedings. B8 LOAD-DATE: July 11, 2001 ??????????????????????????????5 of 54 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ????????????????????July 11, 2001 Wednesday ?Home Edition SECTION: Business; Part 3; Page 2; Financial Desk LENGTH: 325 words HEADLINE: California; ; Calpine to Buy More Natural Gas Reserves; Energy: The power producer is set to purchase wells in Texas and New Mexico for $355 million plus debt. BYLINE: From Bloomberg News BODY: ??California power producer Calpine Corp. on Tuesday agreed to buy 236 billion cubic feet of natural gas reserves in Texas and New Mexico for $355 million in cash and $49.5 million in assumed debt to boost reserves of the fuel it uses to generate electricity. ??San Jose-based Calpine agreed to purchase 35 wells that produce 6 million cubic feet of gas a day in New Mexico's San Juan Basin from closely held Bayless Cos. ??It also agreed to buy a majority interest in Houston-based Michael Petroleum, which produces 43 million cubic feet of gas a day in south Texas, from Carrizo Oil & Gas Inc. ??The purchases increase Calpine's gas reserves to about 1.5 trillion cubic feet, spokeswoman Katherine Potter said. ??The company, a large seller of electricity in California, has been buying gas reserves to protect itself from price increases. The average price of California gas has more than tripled so far this year from a year ago. ??Potter declined to comment on the price of each transaction or to provide other details. ??Calpine has bought three Canadian gas producers in the last nine months. It agreed in February to buy Encal Energy Ltd. for about $1 billion in stock, more than doubling its gas reserves. ??In November, it bought TriGas Exploration Inc. for $103 million. In January, it bought closely held Quintana Minerals Canada Corp. for $97.6 million. ??Calpine said in April it's considering buying gas-producing properties in western Canada and offshore Nova Scotia. ??With the purchases, Calpine is meeting its goal of owning 25% of the gas it needs to produce electricity, the company said. Calpine is running or constructing enough power plants to light about 41.2 million U.S. homes. ??It expects to supply energy to 70 million homes by the end of 2005, the company said. ??Shares of Calpine rose $1.39 to close at $45.34 on the New York Stock Exchange. They have risen 30% in the last year. LOAD-DATE: July 11, 2001 ??????????????????????????????6 of 54 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ????????????????????July 11, 2001 Wednesday ?Home Edition SECTION: Business; Part 3; Page 2; Financial Desk LENGTH: 574 words HEADLINE: California; ; Edison's Finances Fare Better; Energy: After selling some assets, the company appears to be back on track. But it says the future of its utility is in the Legislature's hands. BYLINE: JERRY HIRSCH, TIMES STAFF WRITER BODY: ??Ailing Edison International will have $46 million cash in hand by year's end thanks to a series of financial transactions and asset sales the Rosemead-based power company has undertaken in the last month, company executives said Tuesday. ??Although the actions--which include a massive refinancing of bank loans and bonds, the sale of land and a home security company--will stabilize Edison International, the future of its Southern California Edison utility remains precarious, officials said. ??In a conference call with creditors that are owed nearly $1 billion by SCE, Theodore Craver Jr., Edison's chief financial officer, said the fate of the utility is largely in the hands of a state Legislature that appears reluctant to take action on a rescue plan worked out by Gov. Gray Davis. ? ??The agreement between Davis and Edison gives the Legislature until Aug. 15 to approve the deal. However, some lawmakers have said that's an arbitrary date and that the deadline could be extended. ??The Legislature is scheduled to recess July 20. ??One factor complicating efforts to rescue the utility is the recent failure in settlement talks between the state and power generators. In a hearing before a federal administrative law judge in Washington, state officials and power generators argued over $8.9 million in disputed charges without reaching an agreement. ??Settling the dispute may take months, and the judge indicated Monday that California probably will recoup less than $1 billion. ??"The delay doesn't help the odds of getting the Legislature to move," said Brian Youngberg, an analyst at Edward Jones in St. Louis. "A big refund in hand would have made things simpler for the Legislature." ??The agreement with Davis calls for the state to purchase SCE's transmission lines for $2.8 billion and for SCE to issue bonds to repay as much as $3.5 billion in debts that accrued from selling power at a loss when prices spiked. The bonds would be paid off by a rate increase. ??During the conference call Tuesday, several creditors expressed concern over the lack of legislative movement on the utility's rescue plan. SCE is making only interest payments to the creditors, which hold $931 million in defaulted bonds and notes. ??One creditor asked whether SCE would file for bankruptcy if the Legislature fails to take action by the August deadline. ??"We are not prepared to state what we would do," Craver responded. ??However, he noted that the utility let pass an earlier deadline for the California Public Utilities Commission to approve aspects of the agreement. The commission has since addressed most of the issues. ??He said SCE still believes that a bankruptcy would make solving the utility's financial problems more complicated. ??The next significant date after the August deadline is Sept. 15, when $200 million in bank loans come due. ??On Tuesday, Edison International's shares closed up 5 cents at $14.05 on the New York Stock Exchange. The stock has risen about 21% over the last five trading days. ??Recharged ??A debt refinancing and the sale of its home security business and other assets have helped stabilize the finances of Edison International, sparking a rally in its stock, which has gained nearly 21% over the last five trading days on the New York Stock Exchange. ??* ??Edison, weekly closes and latest ??Tuesday: $14.05, up 5 cents ??Source: Bloomberg News GRAPHIC: GRAPHIC: Recharged, Los Angeles Times LOAD-DATE: July 11, 2001 ??????????????????????????????7 of 54 DOCUMENTS ??????????????????Copyright 2001 The New York Times Company ??????????????????????????????The New York Times ????????????????July 11, 2001, Wednesday, Late Edition - Final SECTION: Section A; Page 1; Column 3; National Desk LENGTH: 1519 words HEADLINE: Calls for Change in an Ancient Occupation BYLINE: ?By EVELYN NIEVES DATELINE: MOJAVE, Calif. BODY: ??The shepherd was deep in the desert, eight miles from the nearest road and more than four miles of rocky brush past the closest sign of civilization, a landfill. It was midafternoon, 110 degrees, and the 500 sheep he tends 24 hours a day, seven days a week were sleeping. But with nothing else to do, he was watching them anyway, pacing the parched earth with two panting border collies by his side. ??Two years and eight months into a three-year contract as a shepherd under a federal guest worker program, the 40-year-old Peruvian said he was still waiting for a day off. He lives in a 6-by-12-foot trailer with no running water, no electricity, no phone, no toilet. ???"This is my bathroom," he says with a toothy smile, holding up a long-handled garden shovel. ??The man, who would not let his name be used for fear of angering his employer, is typical of shepherds in the United States, about 800 of whom toil in California. Mostly from Peru and Chile, they live isolated, nomadic existences here, dependent upon their employers for food, mail and all contact with the outside world. ??Aside from tinny radios or tiny televisions that some keep in their trailers, they live much as shepherd have always lived, in the middle of nowhere with no human contact save for when their bosses come to move the trailer to a new grazing spot or bring their weekly rations of food and water. ??In the universe of migrant farm labor, shepherds make up the tiniest sliver and are so invisible that with a few exceptions they have had no advocates to call for reform. ??As federal guest workers, they are brought here because their employers, the sheep ranchers, could find no Americans willing to be shepherd, even here in California's farm belt, where unemployment in some counties is over 15 percent. ??That may be not only because their living conditions make migrant farm workers seem pampered, but also because under a quirk in federal labor laws, shepherds are excluded from minimum wage regulations. Until July 1, when California's Industrial Welfare Commission, which regulates working conditions, ordered sheep ranchers to increase herders' wages by $150 a month, shepherds, who are essentially on duty 90 hours a week, made $900 a month. ??Still, shepherds in California, the largest sheep ranching state after Texas, are the lucky ones. They make the most money. In other states, the pay is $600 to $800 a month. ??Shepherds are also on the legislative map. When the state Industrial Welfare Commission refused to set working conditions for shepherds, such as overtime pay and rest periods, State Assemblyman Paul Koretz, a Democrat from West Hollywood, drafted a bill that would require rest periods and basic amenities, such as toilets, lighting, water and regular access to phones. ??The bill, which has passed the Assembly and is expected to be reviewed by a State Senate committee today, would require shepherds to be given a 30-minute meal break in a five-hour work period if someone is available to relieve them. It would also require employers to provide housing that includes toilets, heating, lighting, water, stoves and refrigerators. ??"It's logical that at some point their conditions would have to change from the days of the Old Testament," Mr. Koretz said. "I'm generally trying to bring them up to the 20th century." ??But passage of Mr. Koretz's bill is in no way assured. Ranchers vehemently deny that shepherds are mistreated, and lobbyists for the sheep ranching industry say that new regulations would kill an ailing industry. ??Over the last 20 years, sheep ranchers have seen their profits steadily erode. In 1999, California ranchers made 35 cents a pound for wool, 30 cents less than in 1994. Lamb meat wholesales for 82 cents to 83 cents a pound. In 1997, it was 91.6 cents. ??With the erosion of profits, the herd in the state has steadily declined. From 1994 to 2001, according to the United States Department of Agriculture, the number of sheep produced in California dropped by a third, to 840,000, and the number of farms with sheep has dropped by 45 percent. ??Officials of the Western Range Association, a lobbying organization representing ranchers in 11 states, did not respond to calls seeking comment. But in an article in The Fresno Bee, James Holt, an agricultural economist with the association, said the sheep ranchers had been trying to make it clear to legislators that the money to pay for any added benefits or amenities to herders is simply "not there." ??"We've tried to be responsible and responsive" to shepherds, Mr. Holt said. ??Dennis Hollingsworth, a Republican assemblyman from Temecula who voted against the bill, said he thought it would do more harm than good. The shepherds, he said, do not really need rest periods. ??"Most of the time they are resting, unless there is a danger," he said. "Most of the time, it's just watching the flock." ??Mr. Hollingsworth added that the impact of the bill "will not be better wages or working conditions for sheepherders. The impact will be that wool growers will leave this state and there will be less jobs for sheepherders to have in California." ??Mr. Koretz said that he was trying to be sensitive to the industry, and that if necessary, he would moderate his bill so it could land on Gov. Gray Davis's desk and be assured his signature. But a small, persistent group of advocates for the shepherds say that modest goals for shepherds should not be compromised. ??"We're not asking for Jacuzzis," said Chris Schneider, executive director of Central California Legal Services and a crusader for improved conditions for sheepherders for over a decade. "When an industry is going through a low period, we don't lower the minimum wage or say it could force their workers to work without getting paid." ??Last year, the Fresno-based legal aid group published a report on the conditions of 41 shepherds in the lower Central Valley counties of Fresno and Kern, which contain most of the sheep ranches in the state, and found that 90 percent of the shepherds had never had a day off and more than 95 percent had no toilets. The report also said that many shepherds were not allowed visitors, and that they were threatened with deportation if they asked for such things as more food or clean water containers. ??One former shepherd, Victor Flores, said he was dumped at a motel in Bakersfield when he asked his employer for more food. He said he was forced to take another job, as a dishwasher, and now, seven years later, works in a fruit packinghouse. He has formed an advocacy group, the Sheepherders Union, which documents the conditions and experiences of the shepherds. ??"I never thought when I came here from Peru that this country would treat people as less than human," he said. ??Ranchers say that the shepherds are paid much more than they would be making in their native countries, an argument that rankles those fighting for improved conditions. ??"When someone comes to this country, we don't take their native country into consideration in how we treat them or pay them," Mr. Schneider said. ??There is no denying that the shepherds live primitively. Visits to shepherds in Fresno and Kern Counties -- where finding just four herders took two days because of their remote locations -- found them in very old, dilapidated trailers, full of flies and mosquitoes. One shepherd had a plastic water barrel that was clearly full of fungi and smelled of rotted meat. One was spending a 113-degree afternoon in his 110-degree trailer, waiting for the sun to set so he could spend several hours putting up temporary fences to contain his sheep. All their dogs stayed in holes they had dug under the trailers to avoid the blistering heat. ??The shepherd found in the Mojave Desert, the most remote location of any shepherd interviewed, will be moved in October during what is called the lambing season, to farmland outside of Bakersfield. ??He said he looked forward to it, despite the backbreaking 13-hour days of caring for newborn lambs and their mothers, because then he has greater contact with the outside world. Two or three shepherds work together and occasionally go to stores to get supplies for the sheep. ??"I get depressed here very often," he said. ??But he also considers himself fortunate. Once a week, a kindly man he met when he was stationed near Bakersfield during the six-month lambing season brings him a newspaper. And his employer comes to check on him every other day. Many shepherds do not see their bosses for a week or two, when they bring supplies. A few weeks ago, his employer replaced the shabby 6-by-8-foot wooden trailer he was living in with a newer, 6-by-12-foot one that has seating besides a bed. ??And while he has never seen a movie, eaten at a restaurant, attended a church service or even spent a free hour walking around the one city in the United States he has glimpsed, Bakersfield, he said he would renew his contract and do the work for another three years. ??"My sons are 11 and 12 and I want the best for them," he said. "That's what I keep remembering all the time while I'm here." ??http://www.nytimes.com GRAPHIC: Photos: A Peruvian shepherd tended to his flock in the late-afternoon heat of California's Mojave Desert. (Peter DaSilva for The New York Times)(pg. A1); Many shepherds live in small trailers that lack electricity, toilets and running water, like this one in a remote area in Fresno County, Calif. (Peter DaSilva for The New York Times)(pg. A15) LOAD-DATE: July 11, 2001 ??????????????????????????????8 of 54 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ???????????????????JULY 11, 2001, WEDNESDAY, FINAL EDITION SECTION: NEWS; Pg. A3 LENGTH: 512 words HEADLINE: Governor threatens to sue utilities for refunds; Davis says California won't settle for $1 billion SOURCE: Chronicle Staff Writer BYLINE: Mark Martin DATELINE: Sacramento BODY: One day after a federal judge rebuked California's claim that energy generators owe the state $8.9 billion, Gov. Gray Davis all but vowed to sue the companies to recoup the money. ???"If you think California will settle for $1 billion in refunds, we'll see you in court," Davis said yesterday. ???Continuing his heated rhetoric on the energy crisis, Davis blasted the energy companies for being inflexible during a 14-day negotiation session in Washington, D.C., that ended Monday. Both the state and power generators argue each is owed money as a result of California's dysfunctional electricity market. ???Federal Energy Regulatory Commission chief administrative law Judge Curtis L. Wagner ended the talks by saying the state was owed far less than it claimed, but the FERC's governing board will make a final decision on who owes what to whom in the coming months. ???Yesterday, Davis made it clear he wouldn't accept a FERC decision that strayed far from the state's calculations that power companies overcharged California nearly $9 billion. ???"The ball is in the FERC's court," he said. "They must step up and provide the refunds we've asked for." ???While Davis said California officials had gone to Washington prepared to discuss ways to reach a settlement, including renegotiating long-term contracts to buy power, an energy industry official faulted the state for its unwillingness to compromise. ???Generators put forward an offer even though they believe no refunds are owed, said Jan Smutny-Jones, executive director of the Independent Energy Producers. ???Smutny-Jones said the state needed to stop thinking it would get the $8.9 billion. ???"It's clear from the way the issue was characterized by the judge that $9 billion is not something the state is going to see any time in the near future," he added. "It is not based in reality." ???Davis also took heat from Republicans yesterday. ???"He desperately needs that refund, so he can renegotiate the dreadful contracts he has entered into," said Rob Stutzman, a consultant for the California Republican Party. "He's sitting at the poker table with very few chips." ???In other energy news yesterday, a judge refused to let a committee represent the public in the Pacific Gas & Electric Co. bankruptcy case and said a consumer lawyer's "irresponsible position" at a hearing last week could mislead PG&E customers into filing needless refund claims with the court. ???U.S. Bankruptcy Judge Dennis Montali said any refunds owed to customers were unrelated to the bankruptcy case and would be determined by regulators. ???At the hearing Thursday, attorney KaarenThomas argued that unless a committee represented customers' interests, PG&E could try to bar all refund claims that weren't filed by Sept. 5. ???Montali ruled in May that the committee was not authorized by federal bankruptcy law, and reaffirmed his ruling yesterday. ??-------------------------- ??Chronicle staff writers Lynda Gledhill and Robert Egelko contributed to this report.E-mail Mark Martin at markmartin@sfchronicle.com. LOAD-DATE: July 11, 2001 ??????????????????????????????9 of 54 DOCUMENTS ??????????????????????Copyright 2001 The Washington Post ?????????????????????????????The Washington Post ???????????????????July 11, 2001, Wednesday, Final Edition SECTION: A SECTION; Pg. A02 LENGTH: 934 words HEADLINE: GOP Speeds Action on Limited Energy Bills BYLINE: Peter Behr and Mike Allen, Washington Post Staff Writers BODY: ???House Republican leaders yesterday began a hurried campaign to pass a package of energy measures before Congress's summer recess begins in three weeks, but left many key issues on the sidelines because of differences with Democrats and a lack of clear policy signals from the Bush administration. ???A House Energy and Commerce subcommittee is scheduled to begin voting this week on a scaled-back legislative proposal that would increase federal subsidies for cleaner coal-burning technology, help more low-income households winterize homes and pay energy bills, and call for more energy-efficient television sets. ???But a much longer list of high-priority measures, including many in President Bush's energy plan, are stalled or tangled by divisions within the energy industry or between the industry and environmental critics. The delays could threaten action on the energy production and transmission problems cited by the administration eight weeks ago when it unveiled its program to address what it said was a looming national energy crisis. ???"Whatever momentum there is [for comprehensive energy legislation] is dissipating by the day," said Randall E. Davis, a Washington attorney who was a White House energy policy adviser in the Reagan administration. ???Bush administration officials are finishing legislative proposals to deal with challenges to the nation's electricity system, including siting of new power lines, transmission network reliability and the future of retail electricity deregulation. White House aides say the complexity of these energy problems takes time to resolve. ???"If we were to rush through these things, you'd be asking, 'Don't these issues require more deliberation?' " said Dan Bartlett, deputy assistant to the president. ???The test for the president, however, is whether the window of opportunity for enacting major energy legislation will close this summer or fall before the administration can weigh in -- and how much leverage Bush can exert on the politically charged issue. ???"If you don't have the White House exerting leadership, I don't see where it comes from," Davis said. ???In the face of polls suggesting that energy is becoming a political liability for the Republicans, the House GOP leadership has decided to push a first round of energy legislation forward on a fast track without waiting for the White House, aiming for votes on a package before the Aug. 4 congressional recess. ???Senate Democratic leaders say it will take most of the fall to find agreements on an energy plan that can win approval. ???Rep. W.J. "Billy" Tauzin (R-La.), the House Energy and Commerce Committee chairman, acknowledged yesterday that the bipartisan bill he and other committee members were introducing this week left a small footprint, although he called it "a good first step." ???"It does not do everything that everyone wants at this time," Tauzin said. "Energy issues are never easily addressed," he continued, but the nation's energy challenges require action now. ???The GOP strategy is to report different energy bills from three or four committees, including Commerce, Ways and Means, and Resources, and to bring them to the House floor this month under the direction of House Majority Whip Tom DeLay (R-Tex.). ???In addition to the Commerce bill, the other initiatives include opening the Arctic National Wildlife Refuge in Alaska and other federal lands to oil and gas drilling, and tax incentives and credits for coal-fired power plants and conservation. ???Some lawmakers said that compromise agreements on new conservation initiatives are possible, but will take time, and therefore should not be rushed. For now, however, the limited bill introduced in the Commerce Committee yesterday represents the extent of Republican and Democratic agreement on energy issues, legislators said. ???As the debate unfolds this month, the parties' more numerous differences on energy will be highlighted. ???At a news conference today, for example, Interior Secretary Gale A. Norton and GOP congressional leaders will begin the campaign to open the Arctic refuge to drilling. One of Bush's top priorities, it is opposed by most congressional Democrats. ???Democrats on Tauzin's committee will look for opportunities in the next few weeks to focus attention on one of their key issues, California's energy crisis. Rep. Henry A. Waxman (Calif.) and other House Democrats hope to force a vote on a measure Republican leaders oppose that would order federal regulators to impose tighter price controls on California electricity sales. ???Other energy issues that appear adrift are proposals to increase the fuel efficiency of automobiles, particularly gas-eating sport-utility vehicles; renewal of comprehensive liability insurance for nuclear plant operations; possible repeal of a 1935 law restricting power company mergers; and whether to rewrite clean air rules for power plants and refineries. ???Several administration officials professed to be mystified by congressional criticism. They said more than a dozen administration officials have held five energy meetings on Capitol Hill in the past five days, and Bush plans to address energy, among other subjects, when he meets with the House Republican Conference this morning. ???"Implementing the president's energy strategy is more important now than ever," said Jim Wilkinson, a White House communications official. "Consumers are still vulnerable to wild fluctuations in prices. We've got to make sure that next summer and the summer after that are better than this summer was." LOAD-DATE: July 11, 2001 ??????????????????????????????20 of 54 DOCUMENTS ??????????????????????Copyright 2001 Business Wire, Inc. ????????????????????????????????Business Wire ????????????????????????????July 10, 2001, Tuesday DISTRIBUTION: Business Editors LENGTH: 1003 words HEADLINE: Texas to Avoid California Electricity Shortage; New Customer Brochure Explains Differences in the Texas and California Electricity Markets DATELINE: AUSTIN, Texas, July 10, 2001 BODY: ??The Public Utility Commission of Texas (PUC) and Texas Electric Choice announced today the availability of an educational brochure that explains why Texas will not experience California-style blackouts and electricity price spikes. ??Titled "Texas is Different from California," the brochure informs electric customers that the lights will stay on in Texas because we have plenty of power reserves, diverse sources of power and a strong infrastructure to support competition. ??"Texas is implementing competition before deregulation to ensure that we get it right," said PUC Commissioner Brett Perlman. "In other parts of the country, there are legitimate causes for concern about the energy infrastructure. But Texas has a strong infrastructure to meet our needs for electricity, even during a hot Texas summer." ??Many areas of the United States have experienced strong economic growth in recent years. Questions are being raised about the supply of electricity primarily because new infrastructure to produce and deliver electricity has not kept pace with the new homes and businesses that use electricity in our growing economy. In Texas, new power plants have been built to supply electricity for our growing economy. Texas has also structured the competitive market to encourage competition among Retail Electric Providers (REP) and given them the tools to offer stable prices to customers. ??The brochure explains that Texas has plenty of power to keep up with the rising demand for electricity. More than 50 new power plants have been built or are currently under construction in Texas since 1995 and 31 more are in the planning stages. California, on the other hand, has built only two power plants since 1995. Texas gets its power from diverse sources, whereas California relies on hydroelectric power for 25 percent of its electricity needs. Therefore, during dry conditions, California is susceptible to electricity shortages. ??In 1999, the Texas Legislature passed a law that introduces retail competition in electricity beginning in January 2002. This law gives Texans the power to choose a Retail Electric Provider (REP) -- the company that provides their electricity. Customers of Texas' investor-owned utilities will be able to shop for a REP -- giving Texans more control over their electricity buying decision. The PUC will continue to enforce customer protections and regulate the delivery of electric service to ensure safety and reliability. ??To obtain a copy of the "Texas is Different than California" brochure, or for additional information about Texas Electric Choice, customers may contact the Texas Electric Choice answer center toll free at 1-866-PWR-4-TEX (1-866-797-4839). Customers may also download a copy of the brochure from the www.powertochoose.org web site. ???????????????????10 Ways Texas Differs from California ????????????Texas ???????????????????????????California 1. + More than 27 new power plants ?????- Only two new power plants ?????have been built in Texas since ??????have been built in ?????1995, with another 27 under ?????????California since 1995. ?????construction and 31 more in the ?????planning stage. 2. + It takes approximately two years ??- California has a long and ?????to build a new power plant in ???????difficult licensing process, ?????Texas. ??????????????????????????????where power plants take six ??????????????????????????????????????????to seven years to complete. 3. + Most areas of Texas have little ???- California historically ?????ability to export or import to and ??imports 25 percent of its ?????to and from other states. The ???????electricity from other ?????electricity from most of the new ????states. ?????power plants in Texas will be ?????consumed in Texas. 4. + Texas produces electricity, ???????- California is dependent upon ?????utilizing a diversity of fuel ???????hydropower for 25 percent of ?????sources, including natural gas, ?????its power needs. ?????coal, nuclear energy, wind and ??????California's power supply is ?????others. ?????????????????????????????vulnerable to dry ??????????????????????????????????????????conditions. 5. + The Texas market allows REPs to ???- California did not allow ?????enter long-term contracts for ???????long-term contracts. This ?????power, to help shield customers ?????forced electric providers ?????from price increases. ???????????????there to buy power in a ??????????????????????????????????????????daily market, where they ??????????????????????????????????????????often had to pay high prices ??????????????????????????????????????????when demand was high. 6. + Texas is aggressively building ????- California has significant ?????transmission lines to interconnect ??transmission constraints ?????new power plants; maintain ??????????that limit the ability to ?????reliability and give REPs many ??????move power between the ?????choices in where they buy power. ????Northern and Southern ??????????????????????????????????????????regions of the state. 7. + In advance of retail competition, ?- California began addressing ?????Texas has adopted rules encouraging ?rules for on-site generation ?????generation of power on customers' ???after retail competition ?????premises to give customers more ?????began. ?????control over the reliability and ?????price of electricity. 8. + The Texas rules encourage new ?????- California's rules, ?????companies to compete at a retail ????particularly the regulations ?????level. ??????????????????????????????on retail rates, discouraged ??????????????????????????????????????????competition at the retail ??????????????????????????????????????????level. 9. + Texas has learned from California ?- California was one of the ?????and other states experiences what ???first states to deregulate ?????not to do and what to do. ???????????its electric industry. 10. + Texas has a strong restructuring ?- California's restructuring ??????plan in place. ?????????????????????plan has contributed to ??????????????????????????????????????????power shortages, high prices ??????????????????????????????????????????in the wholesale market and ??????????????????????????????????????????financial problems for the ??????????????????????????????????????????state's utilities. ??CONTACT: Public Utility Commission of Texas Gary Rasp, 512/322-5386 gary_rasp@dal.bm.com or Karen Springs, 214/224-8426 karen_springs@dal.bm.com ??URL: http://www.businesswire.com LOAD-DATE: July 11, 2001 ??????????????????????????????21 of 54 DOCUMENTS Content and programming copyright 2001 CNBC/Dow Jones Business Video, a division ??of CNBC/Dow Jones Desktop Video, LLC. No portions of the materials contained ?herein may be used in any media without attribution to CNBC/Dow Jones Business Video, a division of CNBC/Dow Jones Desktop Video, LLC. This transcript may not ???????????????????????be copied or resold in any media. ???????????????????????CNBC/Dow Jones - Business Video ?????????????????????SHOW: CNBC/DOW JONES BUSINESS VIDEO ????????????????????????????July 10, 2001 Tuesday ??????????????????????????Transcript # 071001cb.y50 TYPE: INTERVIEW SECTION: Business LENGTH: 1419 words HEADLINE: The Shaw Group - President & CEO - Interview GUESTS: James Bernard, John Manley BYLINE: Mark Hianes BODY: ???THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED. MARK HAINES, CNBC ANCHOR, SQUAWK BOX: Piping hot earnings right off the presses. The Shaw Group beat the Street by $0.02, third quarter earnings $0.42 a share, net income up 142 percent to $18 million. Revenues up 125 percent to nearly $400 million. The Shaw Group is a leading maker of prefabricated piping systems used mainly in the power, chemical and gas processing industries. The stock has been on a slide. It's down more than 50 percent from the highs it set just last June, just a month ago, a little more than a month ago. Late June it was over 60 from the looks of that chart, closing about 42. Since then about 50 percent. What's going on? No, wait a minute, 60 to 42 is about 30 percent. Where is the stock headed from here? Let's ask James Bernhard. He is Shaw Group's Chairman and CEO. Good morning, sir. JAMES BERNHARD, CHAIRMAN, PRESIDENT & CEO, THE SHAW GROUP: Good morning. HAINES: Is Wall Street missing something here? Your numbers look terrific and the stock is something less than that. BERNHARD: Well, I think that in our sector when FERC came out with the ruling mitigating wholesale price markets in the power business in the western part of the United States, that our stock took a momentary reflection on a downward trend. But I think once we work through those issues that the regulations that occur there has, won't build any more power plants and that is what our business is, the building of power plants, and that market has never been better. ?HAINES: Walk me through this. I guess the thinking was the FERC decision would discourage new power plant production, is that it? BERNHARD: That's it. But, you know, the need for electricity hasn't diminished so the FERC rulings won't decrease the building of power plants and we are not in the buying and selling of electricity, but are in the business of building power plants, coal, gas cycle, as well as nuclear power plants. HAINES: Have you, without naming names, are any of your customers expressing reservations about building plants in certain geographical areas where they fear the political officials? BERNHARD: No, we haven't seen any indication of a downward trend on the building of plants. We have several opportunities in Arizona and Utah and (unintelligible) where we are building plants for the California region as well as those local areas as far as the wheeling process back to California. You know, business has never been better. In fact, yesterday we received a half a billion dollar order from Florida Power and Light for a cogeneration plant in the northeastern United States. So continuing electricity is a decade building process, not an 18 month process. JOHN MANLEY: Mr. Bernhard, it's John Manley. That leads to my question, which is when you talk about the business being as good as it is has ever been, how cyclical is your business? How long can it stay this good? Is there a question of over capacity in that industry at some point in time? BERNHARD: Well, at some point in time there will be but, you know, in the United States we are going through a metamorphosis where we haven't built plants in 20 years and we have deregulation. We not only need to replace old plants but we need to build more efficient plants. And certainly we have to go back to our old coal plants and make them more environmentally -- clean air continues to be a huge factor and I think this is a business for a long time to come. The cycles are long and not the short cycles of 12 to 18 months. The cycles tend to be 10 and 15 years. HAINES: About 80 percent of your business is domestic but 20 percent is a pretty big chunk and it's overseas. What are you seeing in your overseas market? BERNHARD: Well, the overseas markets are beginning to come back, especially the power business in Europe. We think that after the United States in the next eight or 10 years the European market will begin in the next few years, with the deregulation there and the increase in capacity required that it will be also a huge market for us. HAINES: I take it that none of your customers are having difficulty getting financing? BERNHARD: I don't think so. It has been a pretty strong market out there, the need for electricity. I mean, when we are talking about blackouts in different parts of the country, that is a long way, and the need for electricity continues to grow. We are a long way from satisfying the requirements. You need to have a 17 to 20 percent reserve. HAINES: And the credit is out there, was my question, because there are suggestions that many sectors of the economy are seeing a bit of a credit liquidity crunch. All right, Mr. Bernhard, thank you very much and congratulations on some great looking numbers. We appreciate it. BERNHARD: Have a good day. Thank you. HAINES: James Bernhard is Shaw Group Chairman and CEO. SHAW GROUP INC (76%); LOAD-DATE: July 11, 2001 ??????????????????????????????23 of 54 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune Business News ???????????????????????Copyright 2001 Contra Costa Times ??????????????????????????????Contra Costa Times ????????????????????????????July 10, 2001, Tuesday KR-ACC-NO: CC-POWERGRID LENGTH: 938 words HEADLINE: Analysts: Overloaded California Grid Can't Handle High Demand, New Plants BYLINE: By Rick Jurgens BODY: ??Gov. Gray Davis' visit to Pittsburg on Monday to start Calpine's new gas-fired power plant highlighted the state's scramble to avert summer blackouts by squeezing megawatts out of the fleet of generators in California and other western states. ??But while successful so far, running the electricity infrastructure at full bore raises the risk of an even more calamitous collapse, according to a report issued late last month by the Electric Power Research Institute, a Palo Alto organization funded by investor- and government-owned utilities. ??"Critical equipment -- such as large transformers -- on overloaded lines will be running at maximum capacity," according to "The Western States Power Crisis: Imperatives and Opportunities." ??"The failure of a single such critical component could result in unplanned outages that might cascade throughout the Western Region, similar to the multi-state outages of July and August of 1996." ??That July blackout plunged 2 million customers into darkness, while the August blackout in the midst of a heat wave left 7.5 million people throughout the West without power for up to seven hours. ??The institute's report warns that despite those outages and additional demands on the electricity infrastructure from the growth of region-wide electricity trading, transmission line owners have failed to invest in new lines to carry power over long distances. In addition, "routine maintenance and upkeep of transmission equipment has been significantly reduced over the past decade," the report says. ??That has left the West with a big backlog of work. ??"The estimated cost of bringing the regional transmission system back to a stable condition is $ 10 billion to $ 30 billion, to be spent over the next 10 years on new transmission lines and upgrades of existing facilities," although new technologies could trim that spending some, according to the report. Despite the need for such investment, the analysts warn, there is a "lack of adequate financial incentives for investment in the underlying infrastructure and (a) lack of alignment between 'who pays and who gains."' ??California's electricity industry makeover has worsened the problem, according to Brent Barker, the Electric Power Research Institute's corporate communications manager. "With restructuring, the responsibility has been left hanging," he said. "There's a vacuum right now." ??More dollars won't do the job alone, warned Mark Stultz, public affairs vice president for the Electric Power Supply Association, a Washington, D.C., organization of generating companies. To clear the way for effective investment, he said, federal regulators must have the authority to use eminent domain -- take private property for transmission line rights of way and other public purposes. ??But addressing the transmission investment problem won't be easy, warned Severin Borenstein, executive director of the UC Berkeley Energy Institute. "Every transmission line has huge competitive ramifications," helping some power plant owners and hurting others, he said. ??Still, power plant builders are pushing ahead. "California is building its way to total energy self- sufficiency," the governor said in Pittsburg. ??New technology could also aid that effort, enabling generating capacity to be added more cheaply by upgrading existing plants than by building new plants, the report said. Up to 5,100 megawatts -- more than nine times the capacity of Calpine's new $ 350-million, 555-megawatt plant -- could be added with an investment of only $ 460 million in upgrades, according to the institute's report. Fully 700 megawatts could come from spending only $ 2 million to change timber harvest laws to ensure a steady supply of wood chips to fuel generators, it said. ??The report criticizes California and other states that responded to a 1992 federal law encouraging electricity restructuring. They "failed to provide sufficient incentives to build needed generation facilities, increase transmission grid capacity and provide customers with better ways of managing their electricity usage," the report said. Wholesale competition was separated from retail competition, while developing a competitive wholesale electricity market presents "a significant technical challenge that has generally been overlooked by policy makers," it added. ??Stultz of the Electric Power Supply Association said California created many of its own problems. "The wholesale market has shown itself to (be) adaptive in other regions of the country." ??The report also warns against depending too much on a single fuel, natural gas, that faces growing demand and will remain expensive. "California is on the verge of an overreliance on natural gas," it said. "If all the planned additions are built, well over half of California's generation will be gas-fired, compared with about 30 percent now." ??"We may be setting up the next energy crisis down the road," Barker warned. ??To avoid future problems, the report calls for "a coordinated planning mechanism to ensure adequate investment in generation, transmission and load (demand) management" and to design power markets. It also calls for the creation of an "independent institution/agency to perform periodic assessments of the performance of the infrastructure, markets and their interface." ??But Stultz emphasized unleashing market forces. "The way to address the situation in the future is to embrace competition, not to shy away from it," he said. ??----- ??To see more of the Contra Costa Times, or to subscribe to the newspaper, go to http://www.hotcoco.com/ JOURNAL-CODE: CC LOAD-DATE: July 11, 2001 ??????????????????????????????24 of 54 DOCUMENTS ??????????????????????Copyright 2001 Copley News Service ?????????????????????????????Copley News Service ????????????????????????????July 10, 2001, Tuesday SECTION: Commentary LENGTH: 530 words HEADLINE: Copley Editorial Service BODY: ??The energy crisis settlement talks in Washington have failed to reach agreement on how much money the power companies should refund to Californians. But the conference overseen by a Federal Energy Regulatory Commission judge established one very important truth: Power companies definitely did gouge Californians. ??Administrative law judge Curtis Wagner says FERC's latest price-restraint rules should be applied retroactively to Oct. 2 in order to figure out how much the state was gouged. Oct. 2 is the date when FERC acknowledged that wholesale prices were not ''just or reasonable'' under federal law. FERC commissioners claim they have no authority to issue refunds before that date, although California claims they do. ??Wagner says California was gouged by only $1 billion or so, dating to Oct. 2. California says it's more like $4 billion. If the recent FERC price restraints were retroactive to May 2000, and overcharges by all power providers were added up, the state figures it would be owed $8.9 billion. ??Some believe California's deregulation law gave energy companies the freedom to gouge. That's not true. Price gouging in the wholesale electricity market violates the Federal Power Act of 1920, which mandates just and reasonable rates. Market power, the ability of electricity producers to force prices higher, violates that law, and the Federal Power Act requires refunds when market power exists. Market power is gouging. ??FERC, the supposed enforcer of the Federal Power Act, acknowledges that electricity companies engaged in market power but it has so far refused to order appropriate refunds. ??Following the failed settlement talks, California has several venues to press its case. First, FERC could ignore Wagner's figures and decide that power generators owe California the $4 billion. We urge commissioners to do so. ??Wagner also recommended that FERC hold a hearing in which California and the power generators could make their financial claims. If FERC refuses to hold that hearing, or issues a ruling against California, either with or without such a hearing, the state can file a protest to the commission to make its case. If the state gets no satisfaction, it can go to federal court and request a judicial review. ??Federal judges have not yet ruled on whether FERC violated the Federal Power Act by allowing gouging to continue. Federal courts have rejected requests by Southern California Edison and others for emergency action against FERC. The courts said such extraordinary requests were improper because other remedies were available. ??A judicial review would be very different. It would look directly at whether FERC is in violation of the Federal Power Act by failing to ensure just and reasonable wholesale rates. If a federal court finds that FERC has failed its regulatory duty, it could force the commission to order refunds of all charges that were unjust and unreasonable. ??FERC still has the opportunity to make the right ruling and give California ratepayers and businesses their money back. If it doesn't, the state should pursue its case aggressively. Reprinted from The San Diego Union-Tribune. LOAD-DATE: July 11, 2001 ??????????????????????????????27 of 54 DOCUMENTS ???????????Copyright 2001 The Houston Chronicle Publishing Company ????????????????????????????The Houston Chronicle ????????????????????July 10, 2001, Tuesday 3 STAR EDITION SECTION: A; Pg. 1 LENGTH: 921 words HEADLINE: California to get plan for refunds; Officials celebrate judge's proposition SOURCE: Staff BYLINE: DAVID IVANOVICH, LAURA GOLDBERG DATELINE: WASHINGTON BODY: ??WASHINGTON - Power companies failed Monday to reach agreement with California over how much to pay in refunds for alleged overcharging during the state's electricity crisis. ??And so the judge who tried to mediate those talks will recommend a plan that would generate "hundreds of millions, and maybe $ 1 billion" worth of refunds, a far cry from the $ 8.9 billion California has demanded. ??A marathon, 15-day negotiating session between California and a collection of power generators that included Houston-based Reliant Energy, Enron Corp., Duke Energy North America, Dynegy and El Paso Corp. ended without the parties coming close to clinching a deal. ??"In 15 days you can't work miracles," said Curtis L. Wagner, the administrative law judge overseeing the talks at the Federal Energy Regulatory Commission. ??As a result, Wagner will propose the five-member commission adopt a plan that would result in at least some refunds for power sold between October 2000 through May. ??California officials quickly seized on that point to claim victory. ??Michael Kahn, head of the California Independent System Operator, called Wagner's plan a "ringing endorsement" of his states' claims that refunds are necessary. ??But Wagner's methodology for determining how those refunds should be calculated tilted toward the power generators' position in many key respects, hence the wide disparity between his ballpark estimates and California's claims. ??Wagner noted that he had not run the numbers under his methodology. Instead, he will recommend regulators hold hearings within 45 to 60 days to determine exact refund totals. ??California officials insisted the final refund dollars will total "multiple billions." And they left open the very real possibility they will sue in federal court to recoup the remaining dollars they believe they are owed. ??California Gov. Gray Davis, who has been a vociferous critic of the commission, went on the offensive again Monday. ??"While in the past the FERC has shown little, if any, interest in consumers, they now have the opportunity to redeem themselves by returning the $ 8.9 billion California has demonstrated it is owed," Davis said in a prepared statement. ??During the negotiations, the electric power companies, marketers and other suppliers offered to pay $ 716.1 million, never coming anywhere close to California's demands. ??"Not surprisingly, the energy pirates that bilked rate payers out of billions of dollars stonewalled and refused to negotiate in good faith with our team in Washington," Davis said in his last salvo at the out-of-state generators. ??California wanted Reliant, for instance, to pay $ 376 million in refunds, said John Stout, senior vice president for asset commercialization for Reliant's Energy Wholesale Group. ??But that's nearly three times the $ 127 million operating margin the company garnered from its California operations between October and May, according to a filing the company made with the Securities and Exchange Commission last week. ??Stout said Reliant offered to pay slightly less than $ 50 million. ??"We were essentially offering to refund one third of the operating margin over the relevant period," Stout said. ??But Davis contends: "The energy generators and suppliers refused to recognize their responsibility to the people of California and own up to their profiteering." ??California's claims for $ 8.9 billion include sales starting in May 2000. But Wagner only considered claims from October onwards. That meant $ 3 billion of California's claims were not part of the settlement talks. ??"For California to continue this bogus claim of $ 8.9 billion, I think just shows that they are not interested in any kind of a settlement," Enron spokesman Mark Palmer said. "They are just interested in creating a whipping post. The last thing that the political leadership in California wants to do is take responsibility for the problem they created." ??Joel Newton, regulatory counsel for Dynegy and a spokesman for a coalition of generators, argued that California's analysis did not account for last year's rise in natural gas prices, high environmental costs and transportation constraints for both electricity and natural gas. ??The settlement talks were organized not only to try to resolve the differences over refunds but other outstanding disputes stemming from California's power debacle. ??California, trying to move away from its dependence on power purchases from the spot market, has been trying to line up long-term power contracts. ??As of June 12, the state had signed deals totaling $ 42.8 billion with 18 different suppliers. As a result, California purchased only 1.9 million megawatt hours of power on the spot market, down from 4 million in May. ??But with a slew of civil and potentially criminal investigations, some power companies have been loathe to sign long-term deals while those disputes are still outstanding. ??The power companies pushed, as part of the settlement negotiations, to have those other investigations dropped. But California officials refused. ??"We're disappointed that we were unable to reach a global solution," said Dynegy spokesman Steve Stengel. ??California is not the only Western state seeking refunds. Other states in the region have their own claims, totaling more than $ 6 billion. ??Wagner has proposed holding a separate negotiating session for those states, arguing that their concerns had been given short shrift in the settlement talks because of the central battle with California. GRAPHIC: Photo: California Gov.
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