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Today's IEP News... Condit appears to be taking attention away from
electricity. For more headlines please visit www.rtumble.com. Thanks! ?Jean ?AP July 13, 2001, Friday, BC cycle, ?Domestic News, ?246 words, ?Judge says power companies likely owe California 'hundreds of millions,' but not billions, ?By JENNIFER COLEMAN, Associated Press (QUOTES SMUTNY) Writer, ?SACRAMENTO, Calif. Los Angeles Times, July 16, 2001 Monday, Home Edition, Page 1, 1785 ??? ???words, THE NATION; ; Smog Feared in Power Buildup; Electricity: Bush ???administration's plan for up to 1,900 plants over 20 years poses a threat to ???air quality, especially in the Midwest and South, experts say., GARY ???POLAKOVIC, TIMES ENVIRONMENTAL WRITER The New York Times, July 16, 2001, Monday, Late Edition - Final, Section A; ????Page 1; Column 6; National Desk, 1305 words, DROP IN FUEL PRICE MAY WEAKEN ????PUSH FOR ENERGY PLANS, By JOSEPH KAHN, WASHINGTON, July 15 The San Francisco Chronicle, JULY 16, 2001, MONDAY,, FINAL EDITION, NEWS;, ????Pg. A1, 1935 words, Municipal power firms cleaned up; ???Public producers ????charged state far more than private, Mark Martin, Lynda Gledhill, Sacramento Contra Costa Times, July 15, 2001, Sunday, CC-ENERGY-RATES, 906 words, ????California Faces Possible Third Power Rate Hike Contra Costa Times, July 15, 2001, Sunday, CC-UTILITY, 530 words, Many ????California Energy Consumers Cash In on Conservation, By Katie Oyan Copley News Service, July 15, 2001, Sunday, State and regional, 1228 words, ????Controller Connell keeps heat on Davis, but could it cost her? ???????By ????Bill Ainsworth, SACRAMENTO Los Angeles Times, July 15, 2001 Sunday, Home Edition, Page 1, 1899 words, ????The Bashers Are Back; The electricity crisis has given critics of California ????a new opening to predict catastrophe., JOEL KOTKIN Sacramento Bee, July 15, 2001, Sunday, Pg. D3;, 174 words, Save energy, ????save cash, Loretta Kalb Copyright 2001 Associated Press ??????????????????????????????????AP Online ????????????????????????????July 13, 2001; Friday SECTION: Domestic, non-Washington, general news item LENGTH: 248 words HEADLINE: ?Judge: Calif Power Cos. Owe Refunds BYLINE: JENNIFER COLEMAN DATELINE: SACRAMENTO BODY: ???An administrative judge mediating talks between California and energy companies says the generators likely owe the state ''hundreds of millions of dollars'' in refunds, far less than the $8.9 billion California wants. ??Judge Curtis Wagner Jr., in a recommendation released Thursday, said that while California is due ''vast sums'' for overcharges, the state's major utilities, which have amassed crippling debts due to high wholesale prices, owe generators even more. ??Gov. Gray Davis and California officials who attended the 15-day talks pressed for $8.9 billion in refunds, but Wagner said that amount can't be substantiated. ??''That very large refunds are due is clear,'' Wagner wrote, likely amounting to ''hundreds of million of dollars, probably more than a billion dollars in an aggregate sum.'' ??The judge recommended a method for calculating refunds back to October; California's estimate was based on figures from May 1, 2000. ??The differences between what the state wants and what the sellers believe they owe should be decided in a trial-type, evidentiary hearing, Wagner said. ??Jan Smutny-Jones, executive director of the Independent Energy Producers, said the state's refund estimate was based on a ''faulty analysis'' and the judge was correct in lowering the amount. ??Davis said he hoped the Federal Energy Regulatory Commission would reject the lowered recommendation. ?????????????????????????????The Associated Press The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ???????????????????????July 13, 2001, Friday, BC cycle SECTION: Domestic News LENGTH: 246 words HEADLINE: Judge says power companies likely owe California 'hundreds of millions,' but not billions BYLINE: By JENNIFER COLEMAN, Associated Press Writer DATELINE: SACRAMENTO, Calif. BODY: ??An administrative judge mediating talks between California and energy companies says the generators likely owe the state "hundreds of millions of dollars" in refunds, far less than the $8.9 billion California wants. ??Judge Curtis Wagner Jr., in a recommendation released Thursday, said that while California is due "vast sums" for overcharges, the state's major utilities, which have amassed crippling debts due to high wholesale prices, owe generators even more. ??Gov. Gray Davis and California officials who attended the 15-day talks pressed for $8.9 billion in refunds, but Wagner said that amount can't be substantiated. ??"That very large refunds are due is clear," Wagner wrote, likely amounting to "hundreds of million of dollars, probably more than a billion dollars in an aggregate sum." ??The judge recommended a method for calculating refunds back to October; California's estimate was based on figures from May 1, 2000. ??The differences between what the state wants and what the sellers believe they owe should be decided in a trial-type, evidentiary hearing, Wagner said. ??Jan Smutny-Jones, executive director of the Independent Energy Producers, said the state's refund estimate was based on a "faulty analysis" and the judge was correct in lowering the amount. ??Davis said he hoped the Federal Energy Regulatory Commission would reject the lowered recommendation. ? Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ??????????????????????July 16, 2001 Monday ?Home Edition SECTION: Part A; Part 1; Page 1; Metro Desk LENGTH: 1785 words HEADLINE: THE NATION; ; Smog Feared in Power Buildup; Electricity: Bush administration's plan for up to 1,900 plants over 20 years poses a threat to air quality, especially in the Midwest and South, experts say. BYLINE: GARY POLAKOVIC, TIMES ENVIRONMENTAL WRITER BODY: ??The Bush administration's plans for a massive buildup of power plants nationwide could result in dirtier air in places where smog is already bad and getting worse--particularly in the Midwest and the South, air quality experts fear. ??Smog levels have been cut nationwide in the last 20 years, but the 1990s saw deteriorating air quality in places such as Columbus, Ohio, where the number of smoggy days jumped 78% during the decade, and Memphis, Tenn., where they doubled, according to figures from the federal Environmental Protection Agency. ??A large part of the deterioration is attributable to power plant emissions--a major contributor to ozone, which is colorless, and haze. Despite cleanup efforts, power plant emissions are up across much of the fast-growing South and in the Plains states. ??Meanwhile, generating plants running at peak capacity to produce electricity for California are sullying Western skies too. Smokestack emissions are up from Washington state to Utah and Arizona to Montana, the EPA says. ??"The interior West has fantastic visibility, and power plants are one of the primary causes of visibility degradation," said Bruce Driver, executive director of the Land and Water Fund of the Rockies. "The emissions stand out like pouring red wine on white carpet. We have concerns about building new power plants in the West." ??The administration's energy plan calls for building up to 1,900 plants over the next two decades, increasing the nation's electrical generating capacity by at least half. That is equivalent to two new 300-megawatt plants a week--the fastest rate of expansion over such a long period since the end of World War II, according to the Department of Energy. ??Republicans at the White House and in Congress say they are confident they can chart a path toward energy stability without harming the environment. ??"Whichever way we go, we'll maintain the air quality standards," said Rep. Joe Barton (R-Texas), who chairs the House energy and air quality subcommittee. ??In theory, more power plants do not have to mean worse air quality. Even plants burning coal, which is the dirtiest of the fuels in current use, can be made much cleaner. (A separate problem--emission of gases that can contribute to global warming--is worsened by any increase in the number of power plants burning coal, oil or natural gas.) ??What most concerns air quality officials is that the administration not only has proposed increasing the number of plants, but it also has stalled efforts initiated by the Clinton administration to force dozens of dirty, older coal-fired plants to install up-to-date pollution control equipment through a rule, known as new source review, that is designed to control emissions from new and modified plants. ??Administration officials began a series of public hearings last week on their proposals to replace the new source review rules. ??When it comes to air quality, the administration's energy plan offers a fork in the road, said John D. Bachmann, associate director of science policy in the EPA's air quality division. ??"The good path is: We can build a lot of new power plants with modern technology that have less emissions and phase out older plants," he said. "Or we can loosen emissions caps and the new source review regulations, burn lots of coal and let the power plants go." ??Under that scenario, "you would see a worsening of air quality," he said. ??Power plants will be the major factor governing air quality in much of the nation for decades, said William Chameides, a chemist in the School of Earth and Atmospheric Sciences at the Georgia Institute of Technology. ??"Extra power plants will put more emissions in the air," he said. "I don't know if people have thought this out very well, and I don't think people are aware of the magnitudes we are talking about." ??In the optimistic view, the future could look like the Polk Power Station, now operating in a swamp near Fort Lonesome, Fla. The plant is one of two commercial clean-coal plants, which burn gases emitted from superheated coal. It emits 85% fewer nitrogen oxides than a typical coal-fired plant. ??Nitrogen oxides, which contribute to haze and acid rain, are one of the major pollutants produced by power plants. In the air, they are key to forming ozone, a toxic gas that can sear lung tissue and cause shortness of breath, headaches, nausea and long-term loss of lung function. ??Nitrogen oxides are also the only major pollutant targeted under the Clean Air Act that is not in decline. Emissions have increased nearly 20% since 1970, according to the EPA, with most growth due to coal-fired power plants and heavy-duty diesel engines. ??Nationwide, emissions of all smog-forming pollutants from power plants dropped slightly over the last 10 years. But across the rapidly growing South and parts of the Great Plains and Midwest, emissions during the decade rose--growing as much as one-third in some areas, according to EPA figures. ??The administration has committed $2 billion to clean coal research over the next 10 years. President Bush comes from Texas, which uses more coal-fired power than any other state; Vice President Dick Cheney hails from Wyoming, the largest coal-producing state. ??But power plants like the one at Fort Lonesome are only clean relative to conventional coal plants and are expensive to construct. The Florida plant emits 20 times more nitrogen oxides than a comparable plant fired by natural gas and costs three times as much to build. Moreover, a coal-burning plant, even with the cleanest technologies, poses much more of a global warming problem than a plant using natural gas or oil. ??The major provision of the Clean Air Act that is aimed at controlling emissions from new power plants is the new source review rule. EPA officials say the rule has typically resulted in emissions cuts at power plants of 70% to 95%. ??Air pollution control officials consider new source review to be a key to controlling power plant emissions. Weakening the rules will certainly worsen air quality in many areas of the country, said S. William Becker, executive director of the State and Territorial Air Pollution Program Administrators and the Assn. of Local Air Pollution Control Officials. ??Administration officials, by contrast, consider the rule bureaucratic, costly and ineffective. "New source review is a roadblock to clean-burning energy plants," said Cheney's spokeswoman, Julienna Glover-Weiss. ??What the administration favors is a market-based program that would cap total emissions from power plants and allow companies to buy and sell credits to reach reduction targets. Companies that reduce more than their pollution allocation can sell to companies that produce over their limit. ??Such programs are favored by free-market advocates, industry groups and many economists. Supporters say market-based programs cost less, offer businesses more options for knocking down emissions and rely on the invisible hand of the marketplace rather than the strong arm of regulatory mandate to find the most effective remedies. ??Air-quality officials and environmental activists fear that the proposed market-based programs would not work. And they say the administration is already showing signs of backsliding in its enforcement of air quality regulations. ??Under intense lobbying pressure from power companies, the White House earlier this year instructed the Justice Department and the EPA to review enforcement actions against companies accused of violating the Clean Air Act. ??In 1999, federal officials charged that 32 coal-fired power plants in several Southern and Midwestern states had ignored a requirement that companies install advanced emission controls whenever their plants are upgraded. ??The government reached a settlement with Tampa Electric Co. Two other settlements are pending with Cinergy Corp. and Virginia Power Co. But several other cases are being reconsidered, including ones against Duke Power Corp., Southern Co. and the Tennessee Valley Authority. ??Critics of the administration's plans also say the record of market-based approaches is mixed. On the one hand, the nation's 11-year-old program to reduce acid rain by allowing power plants to trade emissions credits is widely credited with cutting emissions and saving compliance costs. It corrals hundreds of coal-fired power plants into one market-trading block, caps the annual emissions at 9 million tons and then lets power producers swap credits to achieve the goal. ??On the other hand, a similar market-based program to cut smog in Los Angeles has not worked. Called RECLAIM, it was the world's first attempt to harness market forces to tackle urban smog. Eight years after its inception, however, polluters have avoided installing controls and the state's power crisis has led to a shortage of pollution credits that has driven up compliance costs. The program has failed to cut emissions as expected, although officials are trying to salvage it. ??Many environmentalists oppose market-based strategies to fight pollution. They say they are difficult to enforce, allow too much self-policing by businesses and have the potential to concentrate emissions in poor and minority communities. ??A coalition of 20 environmental groups earlier this month urged EPA Administrator Christie Todd Whitman to suspend trading programs being considered by four states. That request came a week after a letter from the EPA's inspector general's office agreed to investigate concerns about market-based programs. ??Smog U.S.A. ??Power plant emissions of nitrogen oxides are down nationwide over the last decade, but the reductions are not uniform. Added emissions in the South and parts of the Midwest contribute to deteriorating air quality. ??* ??Days per year exceeding 8-hour ozone limit ??Los Angeles ??Average of '90-'92: 132 ??Average of '97-'99: 37 ??* ??Knoxville, TN ??Average of '90-'92: 13 ??Average of '97-'99: 50 ??* ??Atlanta ??Average of '90-'92: 28 ??Average of '97-'99: 47 ??* ??Charlotte, NC ??Average of '90-'92: 17 ??Average of '97-'99: 36 ??* ??Pittsburgh ??Average of '90-'92: 13 ??Average of '97-'99: 27 ??* ??Louisville, KY ??Average of '90-'92: 9 ??Average of '97-'99: 27 ??* ??Raleigh, NC ??Average of '90-'92: 7 ??Average of '97-'99: 20 ??* ??Youngstown, OH ??Average of '90-'92: 9 ??Average of '97-'99: 15 ??* ??Indianapolis ??Average of '90-'92: 9 ??Average of '97-'99: 14 ??* ??New Orleans ??Average of '90-'92: 4 ??Average of '97-'99: 11 ??* ??Ozone is in decline in Los Angeles and the Northeast, but progress against smog is lacking across much of the nation. ??Source: U.S. Environmental Protection Agency GRAPHIC: GRAPHIC: Smog U.S.A., Los Angeles Times LOAD-DATE: July 16, 2001 ??????????????????????????????7 of 77 DOCUMENTS ??????????????????Copyright 2001 The New York Times Company ??????????????????????????????The New York Times ?????????????????July 16, 2001, Monday, Late Edition - Final SECTION: Section A; Page 1; Column 6; National Desk LENGTH: 1305 words HEADLINE: DROP IN FUEL PRICE MAY WEAKEN PUSH FOR ENERGY PLANS BYLINE: ?By JOSEPH KAHN DATELINE: WASHINGTON, July 15 BODY: ??As the Bush administration begins a campaign-style push to drum up support for its energy plan this week, the sense of crisis that had propelled the plan forward has receded while energy shortages ease and fuel prices fall, at least for now. ??Gasoline prices have been going down for six weeks straight and now average $1.47 a gallon, compared with $1.71 a gallon during the week of May 14, when the administration unveiled its energy strategy, according to the Department of Energy. Natural gas prices have dropped even faster and now average less than a third of the peak levels they reached early this year. In both cases, high prices spurred fresh production. ???In California, where record electricity prices and local blackouts captured national attention for months, wholesale power prices have fallen to the lowest levels in more than a year. Analysts credit new power supplies, a state-led conservation effort and federal price controls for averting what many had feared would be a catastrophic summer of scarcity. ??Administration officials said their energy strategy was intended to address long-term shortages, not short-term market fluctuations. But the surge of gasoline, natural gas and electricity supplies appears to undercut the administration's contention, as stated at the beginning of its energy strategy report, that "America in the year 2001 faces the most serious energy shortage since the oil embargoes of the 1970's." ??The White House had once counted on a sense of emergency to persuade Congress to allow drilling on more protected lands and to change or abandon some regulations seen as impeding energy production. ??Lower prices have diminished the sense of crisis and forced the administration to retreat from some priorities on Capitol Hill. The only energy-related proposals that have garnered broad bipartisan support are those that push energy conservation, a subject that critics say got short shrift in the president's energy plan. ??"If we were having blackouts every day you can be sure the president would be out there insisting that we drill in the Arctic or else," said David Freeman, who is coordinating California's response to its electricity shortages for Gov. Gray Davis, a Democrat. "The fact that we've managed to keep the lights on and bring prices way down doesn't help his case much." ??The president's case has also been hurt by polls showing that many people view his energy policies as favoring big oil companies at the expense of the environment. Some Republicans said a backlash against the energy plan had diminished the influence of Vice President Dick Cheney, its main architect. ??Mr. Bush is still turning to Mr. Cheney, and to members of the cabinet, to stir up public and Congressional enthusiasm for drilling and other measures as the House takes up energy legislation this week. ??On Monday, Mr. Cheney is moderating a town hall meeting on energy in Pittsburgh. Energy Secretary Spencer Abraham is in Chicago, Interior Secretary Gale A. Norton is in South Dakota, Commerce Secretary Donald L. Evans is in Charlotte, N.C., and Transportation Secretary Norman Y. Mineta is in Cleveland. Christie Whitman, the administrator of the Environmental Protection Agency, is in Connecticut. ??Yet even House Republicans say prospects for the most contested measures have faded with the price scare. For instance, Representative Sherwood Boehlert, a New York Republican, said there was no chance Congress would approve drilling in the Arctic National Wildlife Refuge. ??"A.N.W.R. is to energy policy as vouchers are to education policy," Mr. Boehlert said. "It's going nowhere." ??Mr. Boehlert said Mr. Cheney had rebounded from criticism that the administration's energy plan paid only lip service to conservation, energy efficiency and renewable energy. ??"That was a misstep," he said. ?"But since then, there's been a concerted effort by the administration to get other points of view." ??Mr. Cheney's aides insist that any miscalculations by the vice president were in tone and not in substance, and that at any rate he is now back on course. ??"The main point is that we've been here six months, and not only have we produced a comprehensive energy plan, but specific initiatives are being marked up in Congress," said Mary Matalin, Mr. Cheney's chief political adviser. ??The White House got a rare legislative victory on energy last week when the Senate rejected a measure to block new drilling activity in the Gulf of Mexico. But that vote came after the administration scaled back its own plan to drill in the eastern gulf, caving in to criticism from many Florida politicians, including Gov. Jeb Bush, the president's brother. ??The administration has fared less well in other votes. The Senate voted last week against opening lands designated national monuments for coal, oil and gas exploration. The House passed a measure that would ban drilling under the Great Lakes. ??And though the administration says it is awaiting a scientific analysis before deciding whether to set higher fuel economy standards for cars and light trucks, a pivotal House panel voted last week to mandate that sport utility vehicles and minivans perform more efficiently. ??As the administration seeks to cobble together an energy package in Congress, it is not likely to have the backdrop of ever-rising energy prices to help close the sale. ??When the White House began preparing its energy plan last winter, Mr. Bush, Mr. Cheney and other top officials, many of whom have had extensive experience in the energy industry, repeatedly sounded the alarm. They said price spikes were the result of chronic underinvestment linked to regulatory impediments. ??But independent analysts now argue that the scare may have had more to do with ordinary business decisions by energy companies. Facing record low prices in the late 1990's, companies did not invest much in new oil and gas exploration or gasoline and electricity production, creating shortages. Higher prices since then have had the reverse effect on investment, supply and prices. ??The Energy Information Administration of the Department of Energy, for example, notes that gasoline prices have fallen sharply during the summer driving season because of a "dramatic response in gasoline production" last spring, when prices were high. At that time, Mr. Abraham, the energy secretary, warned that prices could hit $3 a gallon this summer because refineries could not produce enough gasoline. ??Natural gas markets also seemed deeply troubled a few months back. With the number of rigs drilling gas wells at 550 in early 2000, supplies were thin and prices sky-high. But the industry responded without federal intervention. Now, 1,050 rigs are drilling for natural gas without any new lands opened for exploration. Prices have collapsed. ??"We doubled the rig count in less than 18 months, which is phenomenal," said Darryl Smette, senior vice president for marketing at Devon Energy of Oklahoma. ??In a widely publicized speech, Mr. Cheney used California, which has prided itself on its low per capita consumption of electricity, to illustrate his contention that conservation cannot be the basis of a sound energy policy. ??The administration also steadfastly opposed any federal price controls for wholesale electricity markets in California, arguing that such interference would only distort the market and do little to relieve the state's woes. ??California officials now say tht prices have plunged this summer because of a conservation drive that brought electricity consumption down 11 percent compared with last year. They say several new power plants helped increase supply. And they credit federal price controls, which an independent federal agency imposed after resisting the measure for months, with helping to contain prices as well. ??http://www.nytimes.com GRAPHIC: Chart: "UPDATE: Falling Energy Prices" National average prices for gasoline and natural gas have been declining recently. REGULAR GASOLINE Graph showing the average price of gasoline per gallon, from January 2000 to May 2001. NATURAL GAS Graph showing the average price of natural gas per million B.T.U.'s, from January 2000 to May 2001*. * May-July 2001 figures are estimates. (Source: Energy Information Administration)(pg. A10) LOAD-DATE: July 16, 2001 ??????????????????????????????8 of 77 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ?????????????????????JULY 16, 2001, MONDAY, FINAL EDITION SECTION: NEWS; Pg. A1 LENGTH: 1935 words HEADLINE: Municipal power firms cleaned up; Public producers charged state far more than private SOURCE: Chronicle Staff Writers BYLINE: Mark Martin, Lynda Gledhill DATELINE: Sacramento BODY: From the start of the state's energy meltdown, Gov. Gray Davis and many lawmakers have cast private out-of-state energy companies -- especially those in Texas -- as pirates plundering California's economy. ???But a Chronicle analysis found that some of the most expensive megawatts California bought during the bleak winter months actually came from what many would consider to be sympathetic traders -- publicly owned power producers. ???The Chronicle study of spot market purchases shows that as a whole, public agencies in California and elsewhere charged an average of about $344 per megawatt hour during the first three months of the year, while private companies charged less than $250. ???More than 80 percent of the power sold by public agencies was above the $269 per megawatt hour average that California paid all power providers. Less than a third of the power from private companies exceeded that average. ???"I think anybody who ripped off the state ought to be investigated," said Harvey Rosenfield, head of the consumer group Foundation for Taxpayer and Consumer Rights. "A publicly owned utility shouldn't be prospering from this crisis. And those munis that did ought to immediately forfeit any excessive profits." ???Yet, like with everything in the power crisis, not everything is always as it appears, and public utility officials say they're hardly to blame for the sky-high electricity prices. ???Interviews with operators of publicly owned power providers paint a picture of state Department of Water Resources electricity buyers sometimes so desperate to avert rolling blackouts that they didn't haggle over price. ???"DWR called us and said we're looking for power at $500 a megawatt hour for a seven-hour period," said Kate Hora, a spokeswoman for the Modesto Irrigation District, which delivers power to 95,000 customers in the Central Valley. "There was no negotiation. We just helped them out at the price they named." ???Pete Garris, chief of operations for the DWR department in charge of buying and selling power, said something like that would not have been typical. ???MUNIS PROVIDE 'RELIABLE ENERGY' ???"I could see offering $500 per megawatt hour when the market was trading at $650," he said. "One thing munis do for the most part is provide reliable energy. If they say they are going to deliver so many megawatts, they are going to deliver." ???But that reliability can be expensive. ???Much of the public power was hydroelectric from the Pacific Northwest, usually delivered at expensive peak demand hours. And municipal agencies say they were forced to press into operation old, inefficient generators. ???"(State officials) would call and say, 'We need the energy,' " said Ignacio Troncoso, director of public service for Glendale Water and Power. "We didn't really want to give it to them because it meant using some very inefficient turbines, but they said they needed it. Sometimes, it cost $1,000 or $2,000 per megawatt hour, but they paid it." ???S. David Freeman, Davis' top energy adviser, said the state bought a relatively small percentage of its power from municipal utilities, and it was at a time when the state was getting nearly all of its electricity in the volatile spot market. ???20% FROM PUBLIC AGENCIES ???About 20 percent of the power purchased by California in the first quarter of 2001 came from publicly owned agencies in the United States, Canada or Mexico. ???"You have to consider the volume," said Freeman, whose hiring in April was controversial because he headed the Los Angeles Department of Water and Power. ???Los Angeles charged California on average $292 per megawatt hour for power. Before he joined the state in April, Freeman said Los Angeles' rates were based on cost plus 15 percent. ???"I don't say we're angels, but we're being neighborly," he said then. "We're not giving you a cup of sugar, we're selling it, but not at exorbitant prices." ???Like Los Angeles, Canada's publicly owned BC Hydro sold more than 800,000 megawatts to the state in the first three months of the year at above-average costs. Spokeswoman Elisha Odowichuk said the utility's rates to California were higher because of delivery costs. ???But the utility made enough money to give their Canadian customers a $130 rebate. ???DAVIS WANTS $8.9 BILLION BACK ???Davis has demanded $8.9 billion in refunds for electricity prices the state says were excessive. The state estimates that it is owed about $600 million from the municipals, Michael Kahn, chairman of the board of the Independent System Operator, said last week. ???The state is hoping that the Federal Energy Regulatory Commission will order private providers to issue refunds. But the commission has no jurisdiction over municipal utilities. ???At least one offer was put on the table by municipal utilities and is under consideration, said Steve Maviglio, spokesman for Davis. If no deal is reached, the state is prepared to go to court, he said. ???"Anybody who is on the list of price gougers, we intend to seek refunds from," he said. ???WHY PUBLIC POWER COST MORE ???Energy experts suggested several reasons why public power may have cost the state more than electricity offered by Enron, Duke and other private companies. ???The state probably bought most public power during peak usage hours in the evening or during days when rolling blackouts loomed, said Severin Borenstein, a professor with the University of California's Energy Institute in Berkeley. ???That's how the Modesto Irrigation District briefly got into the business of selling power to the state. The district sold 175 megawatts to California on Feb. 13 for $500 per megawatt hour. ???The district bought power from an Oregon utility for $375 per megawatt hour and delivered it to the state from 1 to 7 p.m. during a Stage 3 power alert. The state avoided blackouts that day. ???Seattle City Light earned on average the most per megawatt hour of any public utility, getting a price of $634. But an official there also said there were no negotiations with the state. ???The utility had a contract to deliver electricity to 35 Nordstrom stores in California. State power grid officials determined that the stores weren't using all the power and then snapped up the excess for what is referred to as the clearing price: the highest price paid for electricity during that hour. ???SEATTLE'S CHARGES DEFENDED ???But Seattle isn't rolling in money because of its dealings with California. The utility has raised rates three times this year, spokesman Dan Williams said. ???Modesto's and Seattle's experiences are probably similar to other public utilities, said Michael Shames of the Utilities Consumer Action Network, based in San Diego. ???"The munis did make a profit," he said. "But there's no evidence that Los Angeles or any other city made the same kind of sky-high profits that the Dukes of the world did. We haven't seen any municipal utility officials taking expensive vacations because of the crisis." ???Shames suggested that public utilities' high rates may not have been as high as private companies' offers. ???"When they (state energy officials) got really tight, the private companies were probably offering to sell at exorbitant prices," he said. ???STATE WAS NO CHARITY CASE ???Still, several publicly owned agencies acknowledge that they didn't treat the state Department of Water Resources as a charity case. ???When the state was desperate for megawatts, Burbank officials would look for power on the open market and sell it to the state if they could make a 10 percent profit to cover such things as administrative expenses, said Fred Fletcher, assistant general manager of the utility. Sacramento Municipal Utility District did the same, a spokesman said. ???Fletcher scoffed at any charge that municipal utilities owe California a refund. ???"It's insulting to ask for any money back. We weren't part of the problem, and we helped the state in a crisis," he said. "And it's not like we're doing well." ???Glendale residents face a 10 percent increase in electricity rates beginning this month, and Burbank ratepayers will see their power bills rise 17 percent beginning this month. ??----------------------------------------------------------- CHART: ???The cost of power for California ???Some of the most expensive megawatts that California purchased on behalf of financially troubled utilities at the height of the energy crisis came from publicly owned power generators. The average price paid during the first three months of the year exceeded the prices paid to private power companies. ??Name ???????????????????????????????????????MWh ???Average price ??City of Seattle, City Light Department ?????3,870 ???$634.17 ??Modesto Irrigation District ??????????????????175 ???$500.00 ??Powerex (trading arm of BC Hydro) ????????804,302 ???$497.87 ??Tacoma Power ???????????????????????????????5,889 ???$475.43 ??Eugene Water & Electric Board ????????????151,850 ???$432.37 ??Grant County PUD (Washington) ?????????????91,209 ???$348.18 ??Sacramento Municipal Utility District ?????47,555 ???$330.34 ??City of Glendale ??????????????????????????27,325 ???$326.99 ??Bonneville Power Administration ??????????461,144 ???$304.64 ??Los Angeles Dept. of Water & Power ???????805,479 ???$292.28 ??Silicon Valley Power (City of Santa Clara) ???400 ???$290.00 ??City of Burbank ???????????????????????????28,940 ???$273.13 ??MSR Public Power Agency (Modesto) ?????????????65 ???$255.00 ??Turlock Irrigation District ???????????????10,675 ???$237.31 ??California Dept. of Water Resources ??????287,454 ???$205.25 ??Commission de Federale Electricidad(x) ????50,752 ???$192.91 ??City of Riverside ????????????????????????????330 ???$190.00 ??Northern California Power Agency ??????????27,172 ???$186.87 ??East Bay Municipal Utility District ????????1,424 ???$173.00 ??Salt River Project (Arizona) ??????????????80,076 ???$169.17 ??City of Vernon ????????????????????????????22,145 ???$161.67 ??City of Anaheim ???????????????????????????33,532 ???$152.60 ???Megawatts used from public agencies ????2,941,763 ???$343.67 ?????????????????????????????????????????????MWh ?????Average price Total megawatts used from private sources ??9,943,224 ?$246.79 ?Total megawatts purchased from all sources 12,884,987 ?$268.90 ??(x) Mexico ???Source: California Department of Water Resources, Chronicle research ???Chronicle Graphic ???Chronicle staff writer Jonathan Wang contributed to this report. / E-mail the reporters at markmartin@sfchronicle.com and lgledhill@sfchronicle.com. GRAPHIC: PHOTO, CHART: SEE END OF TEXT LOAD-DATE: July 16, 2001 ??????????????????????????????14 of 77 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune Business News ???????????????????????Copyright 2001 Contra Costa Times ??????????????????????????????Contra Costa Times ????????????????????????????July 15, 2001, Sunday KR-ACC-NO: CC-ENERGY-RATES LENGTH: 906 words HEADLINE: California Faces Possible Third Power Rate Hike BODY: ??Is another electricity rate hike in the offing? ??State officials plan to release updated numbers early next week showing how much money California needs to buy electricity and make payments on what is expected to be the largest municipal bond issue in history. ??And those figures will largely determine whether Californians will absorb a third electricity rate hike this year. ??The release will be part of a scramble of regulatory filings during the next several weeks as California prepares to sell $ 13.4 billion in bonds. ??Those decisions will determine whether electricity bills will rise -- or even fall -- and how much autonomy the state's electricity buyers will have in increasing rates. They will determine how much money from ratepayers will go to the state and how much to utilities, and whether businesses can choose to buy electricity directly from suppliers. ??In a related development, the Legislature seems to have escaped the doldrums that had slowed progress on a bailout of Southern California Edison. ??Friday, Gov. Gray Davis, citing "a flurry of activity in both the Senate and the Assembly," said action could come as early as next week. Ted Craver, the financial chief of Edison International, the parent of Southern California Edison, said that he also was encouraged by activity in the Legislature. ??With Pacific Gas & Electric Co. already in bankruptcy court, a similar move by Edison would constitute a major setback to Davis and his efforts to restore normalcy to the state's electricity industry. ??Craver wasn't completely upbeat. "We're running out of days," he said. "We need to have things accomplished." ??In the meantime, the state remains in the power-buying business bigtime. In January, the state Legislature gave the California Department of Water Resources a blank check, with the promise that the Public Utilities Commission would raise electricity rates high enough to cash it. ??Monday, PUC President Loretta Lynch plans to release a proposal spelling out the mechanisms that will allow the DWR to cash the check. The water agency is expected to provide estimates of its financial needs within days after that. ??The agreement being drawn up by Lynch also is pivotal to the $ 13.4 billion bond issue the state is counting on to finance its power buying. ??Investors are seeking assurance from the PUC that the money will be there to repay the bonds. That money will come from ratepayers, through the sale of electricity, and the bonds won't be backed by the taxpayers. That makes it essential for the success of the bond issue that the PUC ensure there is enough revenue from ratepayers to cover everybody, Lynch said. ??Oscar Hidalgo, a water agency spokesman, dismissed widespread speculation Friday that the figures the agency plans to release early next week will show that rate increases are needed. ??"It's totally off," Hidalgo said. "We don't anticipate there being an increase beyond what's already been done." ??Still, it's not that simple. After the department's numbers are revealed, the state's utilities will stake their claims to compensation for the power they generate at the power plants they still own. ??So even if the water agency thinks there's enough money in the till, there nevertheless might not be once the utilities get their share. ??"There's going to have to be another rate increase," said PUC Commissioner Richard Bilas, a Republican on a Democratic-controlled commission that is divided sharply along party lines. ??You can't recover the "tons of billions" of dollars the state is spending with relatively modest increases, the commissioner said. ??Bilas said he wants retail rates fully deregulated so that the market would determine electricity bills. Failing that, he acknowledged that he has no idea how high the commission would have to set regulated rates to cover the state's expenses. ??But Democrats in control of the commission were noncommittal Friday. ??"I don't have the numbers," said Lynch. ??Carl Wood, another Democratic commissioner who often works closely with Lynch, said he too could not guess whether rate hikes would be needed. ??"Not before we get the revenue requirement (from the water department)," Wood said. "And even after we see the revenue requirement, unless it's something that jumps out at you, it's going to need analysis." ??If another rate increase is ordered, it would come on top of new rates that average about 40 percent higher than last year. ??But even the higher rates may not be enough to cover the state's $ 8 billion tab for electricity during the first half of the year, back the rest of the $ 13.4 billion bond issue and finance future power buying. ??Earlier this week, the DWR disclosed that it spent $ 3.9 billion buying power in April and May, about 9 percent more than it forecast in financial projections given to the PUC in May. Spending in May was about $ 2 billion, about $ 243.1 million, or 12 percent, ahead of the projection. ??Hidalgo, the DWR spokesman, blamed the higher-than-expected spending in May on record heat, but noted that June spending was "under forecast." In a May 2 filing with the state PUC, the DWR predicted that its power commitments during June would total $ 1.1 billion. ??By Mike Taugher and Rick Jurgens ??----- ??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 16, 2001 ??????????????????????????????15 of 77 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune Business News ???????????????????????Copyright 2001 Contra Costa Times ??????????????????????????????Contra Costa Times ????????????????????????????July 15, 2001, Sunday KR-ACC-NO: CC-UTILITY LENGTH: 530 words HEADLINE: Many California Energy Consumers Cash In on Conservation BYLINE: By Katie Oyan BODY: ??Whether it's the call of duty or the cash incentive, the first wave of power bills reflecting a state rebate program show a large number of Californians are lining up to ease the grid. ??Savings from Pacific Gas & Electric's 20/20 rebate program total $ 7.6 million so far, a spokesman said. ??The program, an initiative by Gov. Gray Davis to promote conservation, shaves 20 percent off customers' bills for using 20 percent less energy this summer than last summer. ??PG&E has processed one-third of its July power bills, and the results show that 29 percent of customers sliced enough electricity use last month to earn the reward. ??Out of about 1.3 million bills processed, 394,000 customers qualified for the credits. ??Thousands more still stand to gain as the company sifts through remaining bills. PG&E serves 4.7 million customers in Northern California, from Baker to the Oregon border. ??"Twenty-nine percent are meeting the qualifications, which is good," said PG&E spokesman Jon Tremayne,. "That's a significant chunk." ??The results also are significant compared to previous expectations. Davis administration officials estimated that 10 percent to 20 percent of customers would earn the rebate. ??Of those who qualified, 355,000 were residential customers and 39,000 fell under commercial, industrial or agriculture categories. ??The savings were divided roughly in half. Residents saved $ 3.7 million; businesses, factories, farms and ranches saved $ 3.9 million. ??The average residential customer who qualified for the discount sheared $ 10.50 off energy costs. Commercial, industrial and agricultural customers -- whose bills can reach $ 200,000 a month --saved an average of $ 100. ??"In general, these are all very positive results," Tremayne said. "It shows that Californians as a whole, individually and collectively, do our part." ??Davis ordered investor-owned utilities -- PG&E, Southern California Edison and San Diego Gas & Electric Co. -- to take part in rebate programs in March. ??The campaign was designed to stave off rolling blackouts and spare the state from having to import loads of expensive electricity on behalf of its financially distressed utilities. ??The programs benefit California's biggest energy guzzlers the most. Those who used very little electricity to begin with have little room to cut back. ??Merle Luck, a senior citizen who lives in a one-bedroom apartment in Concord, said the 20/20 reward is likely out of her grasp. ??"My bill isn't that high, so I don't come up to the baseline," she said. ??If Luck uses any less electricity than she already does, she'll roast. ??"I'm more careful and I think twice, but my big thing is the air conditioner," she said. "I'm not keeping it quite as cool as I would like, but I have lots of windows and lots of sun, and it can get very warm." ??Even with her conservation efforts, Luck's $ 28 power bill wasn't as steep as she expected. ??"It's a little more than last year at this time, but I think we've had more heat," she 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 16, 2001 ??????????????????????????????16 of 77 DOCUMENTS ??????????????????????Copyright 2001 Copley News Service ?????????????????????????????Copley News Service ????????????????????????????July 15, 2001, Sunday SECTION: State and regional LENGTH: 1228 words HEADLINE: Controller Connell keeps heat on Davis, but could it cost her? ?By Bill Ainsworth DATELINE: SACRAMENTO BODY: ??Controller Kathleen Connell is a Democrat with a fading political career who occupies a little known office she must leave next year. ??Yet during the past five months, she's been able to use her narrow area of authority the power to write checks to become one of the most high-profile critics of Gov. Gray Davis' energy policy. ??Connell has repeatedly undermined and embarrassed her fellow Democrat by disputing the fundamental premise of his energy plan, publicizing lucrative contracts he has awarded to consultants and refusing to pay a controversial public relations operative the governor hired. ??Davis' aides call Connell known around Sacramento as a mercurial, demanding and combative personality a ''publicity hound and showboat'' who is making it more difficult for California to climb out of the financial swamp created by the energy crisis. ??Garry South, top political adviser to Davis, said Connell turned on the governor despite his support for her in her first run for office in 1994. ??''She's a viper,'' South said. ''She's one of the most vile people I've ever known in politics.'' ??Connell dismisses such attacks as ''unfortunate finger-pointing,'' saying she's trying to prevent foolish financial decisions. ??''The controller is a safety valve,'' said Connell, who will be forced from office by term limits. ''I see myself as a circuit breaker, someone who independently reviews financial matters for taxpayers.'' ??In that sense, she said, she's simply following the playbook written by her predecessor the governor himself in using the controller's office to provide independent financial advice. ??''I'm compelled to speak out to prevent an expensive energy crisis from morphing into a financial meltdown of our economy,'' she said. ??When Davis was controller, from 1987 to 1995, however, he aimed his broadsides at governors from the other party. ??By contrast, Connell has provided ammunition for Republicans. ??Her projections questioning the governor's electricity plan were cited by Assembly Republicans as one reason they opposed, and delayed, the $13.4 billion bond the governor is seeking. ??Her conflict-of-interest allegations against Davis' energy consultants have been amplified by Republican gubernatorial candidate Bill Jones, who has used them to try to discredit the administration. ??Connell chose a highly public forum, the California Democratic Party convention, to begin attacking Davis. During her March speech she criticized his ''delaying and incremental'' approach to energy. ??Since then, Connell has escalated her criticisms, focusing on the central part of Davis' energy rescue plan: long-term electricity contracts. ??These $43 billion contracts, Davis argues, have not only decreased the amount of electricity the state must buy on the volatile spot market, but they have had the effect of lowering prices on the market. Others cite different reasons for a drop in spot market prices. ??Connell insists the state was wrong to sign so many long-term contracts when electricity prices were at their peak. She has accused the Davis administration of vastly underestimating the total cost for these contracts. ??''It will cost California a fortune,'' she said. ''They are a bad business deal for California.'' ??She released the contracts to the public earlier than Davis had planned. ??Connell has questioned the Davis administration's ethics. She has refused to pay Chris Lehane, a public relations consultant Davis hired, because he had previously worked for Southern California Edison, one of the utilities the state is trying to rescue. ??She also objected to Davis' contract with the two Wall Street firms he hired to advise him on energy policy. The Blackstone Group and Saber Partners stand to earn more than $14 million if the state buys transmission lines from utilities. ??Connell said the contract is ''bizarre'' because the firms get more money if the state pays a higher price for the transmission lines. She believes their compensation shouldn't depend on what the state pays the utilities. As it stands, the transmission-line deals are in jeopardy. ??She said last week that she may not write the check because Saber Partners might have a conflict of interest. The firm's Web site says that one of the financial products it developed was used by Southern California Edison. ??Davis press secretary Steve Maviglio said Saber Partners never worked for Southern California Edison. Further, he defended the contract as a standard arrangement with just one difference: the firms are working for the state at about half their normal cost. ??Maviglio said Connell's criticism of the contracts is typical of her reckless approach. ??''She goes off half-cocked without the facts,'' he said. ??Maviglio accused her of undermining Davis' energy policy with Wall Street interests who must prepare and assess the $13.4 billion bond the state wants to sell to pay for electricity, which would be paid off by ratepayers over 15 years. ??If they believe Connell's charges that the state is in dire financial straits, he said, ratepayers could be forced to pay millions more in interest costs. ??''She continues to raise the red flag when the governor is trying to convince Wall Street we're on stable ground,'' he said. ??Maviglio and others suggest that Connell may be angry at Davis for endorsing a rival, former Assembly speaker Antonio Villaraigosa, for mayor of Los Angeles. ??Connell, who entered the contest late, finished sixth in the primary, the last place of any major candidate. The controller said she never expected Davis' endorsement. ??In most areas, she said, she agrees with the governor, whom she said she helped prepare for the 1998 gubernatorial debates, something South said is not true. ??Connell, who served in the housing administration for former Los Angeles Mayor Tom Bradley and worked as an investment banker, exploded onto the political scene in 1994. She was a no-nonsense, business savvy Democrat who used her wealth to finance her own campaign and win election in a year that was a disaster for the party. ??A political loner, Connell has earned a reputation as a difficult boss whose actions prompted an exodus from the office. ??In one case, she appeared on the television news program ''60 Minutes'' to criticize delays in prosecuting Medi-Cal fraud cases. But she never mentioned that her office had reprimanded the one employee who had expedited such prosecutions. ??In 1998, she decided at the last moment against running for governor and ran instead for re-election. ??When Davis became governor, he paid her back by trying to get her removed from one of her most important posts, the Franchise Tax Board. She pleaded with the governor in a phone call, and he dropped the plan. ??Later, Davis tried to take away her job of issuing refund checks for incorrectly collected smog fees. ??Connell's efforts to gain publicity from a backwater office, and her political ambition have made her a ''female version of Gray Davis,'' said Bruce Cain, a political scientist who heads the Institute of Governmental Studies at UC Berkeley. ??Despite Connell's dismal finish in the Los Angeles mayor's race, Cain said the controller may challenge the governor in the Democratic primary, something Connell denies she's planning. ??''Her only shot is up or out,'' Cain said. LOAD-DATE: July 16, 2001 ??????????????????????????????19 of 77 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ??????????????????????July 15, 2001 Sunday ?Home Edition SECTION: Opinion; Part M; Page 1; Op Ed Desk LENGTH: 1899 words HEADLINE: The Bashers Are Back; The electricity crisis has given critics of California a new opening to predict catastrophe. BYLINE: JOEL KOTKIN BODY: ??California-bashing, that great staple of the early 1990s, has returned. Emboldened by the state's embarrassing energy woes and the thundering crash of its dot-com economy, California's traditional detractors--Texas energy barons, Western economic-development officials and Eastern media moguls--are again predicting the state's imminent demise. ??Business Week, for example, recently devoted its cover to California's ills. "The Golden State's prospects," it intoned, "seem to be getting dimmer and dimmer." Stories now abound of job recruiters from the South and West landing in San Jose handing out flashlights to supposedly itchy-to-leave Silicon Valley executives. The old, familiar themes of overcrowding, ethnic tensions, Hollywood discontent and environmental degradation have been pressed into service to sustain the dreary predictions. ??To be sure, there is much to be concerned about. Sacramento's management of the energy crisis has been uneven, California's public education system is slow to improve and the state's housing shortage is deepening. Furthermore, the Anderson Business Forecast at UCLA recently predicted a contraction in the state economy because of the electricity crisis. ??Yet, California is not about to fall into a long-term decline. Now the world's fifth-largest economy, recently surpassing that of France, the Golden State has emerged as the dominant force in both the "hard" and "soft" ends of the digital revolution. For this reason, if for no other, the state seems virtually assured of maintaining a global leadership position that no one--certainly not Texas or New York, much less geriatric Europe or Japan--is likely to overcome in the foreseeable future. ??David Shulman, an economist with Lehman Bros. and one of the most knowledgeable Wall Street experts on California, says the resurgence of California-bashing is not justified by the facts. Unlike the early 1990s, when the cratering defense economy fueled some extreme pessimism, today's California economy is remarkably diversified. ??"With the end of the Cold War, I saw the justification for some California-bashing," recalls Shulman, who back then was with Salomon Bros. "But the California improvement in the 1990s was pretty evident. The economy has changed. This is clearly where people go to create wealth." ??The most troubling problem spots in the U.S. economy lie elsewhere, notes Milken Institute regional economist Ross C. DeVol. Especially hurt is the industrial Midwest, which has been hammered by the precipitous decline in "big ticket" purchases such as cars and refrigerators. The Great Plains, facing a falling population and largely uncoupled from the digital economy, suffers from weak commodity prices. Even in the high-technology sector, most of the severe losses are being felt at the manufacturing level (chips, computers), which is increasingly concentrated in lower-cost regions like the deep South and Western locales like Phoenix. ??Shulman thus traces much of the current bashing to wishful thinking in places like New York City, where hopes are again being raised that the painfully prolonged California era is at an end. "At this stage, it's illogical, more psychological than real," Shulman suggests. "It makes people back here feel better." ??The best way to gain perspective on the revival of California-bashing is to revisit the early 1990s. Then, the end of the "California dream" was so widely predicted and accepted, even in the state itself, that it took fortitude, or blind faith, to think otherwise. ??Remember the headlines? "California: End of the Dream." "California Dream Turns Into a Nightmare." "State of Collapse." The doomsayers were not just trend-jumping journalists but also Wall Street analysts such as Prudential Bache's George Salem, who wrote in 1992 that California "appears in the early stages of a long-term economic slide." It would take at least a decade to recover, he proclaimed, if ever. ??It wasn't just the economy that was wrong. Salem and others saw the state, particularly riot-scared Los Angeles, as a racially divided dystopia. Two leading scholars associated with USC's Southern California study center described the City of Angels as "a superficial gloss of striking beauty, glowing light and pastel hues, which together conspire to conceal a hideous culture of malice, mistrust and mutiny." Furthermore, as late as the mid-1990s, UCLA forecastors, who were intially slow to predict the downturn, saw little evidence of an eventual recovery. ??So what happened? Within two years of Salem's predicted "long-term decline," the California economy, after taking a huge hit from the collapse of the long-dominant aerospace economy, started to show unmistakable signs of recovery. Hollywood, which the USC professors had predicted was about to leave town for good, went on a hiring binge, boosting its employment base by two-thirds. Silicon Valley, widely thought to be on its heels in the face of the Japanese juggernaut, took off on one of the most spectacular expansions in the history of modern economies, establishing itself even more as the global epicenter of the digital revolution. ??California not only came back. It also gained ground on the rest of the country, not to mention the world. Statewide job growth since 1994 has been roughly 30% higher than the national average. Over the past three years, California's job growth has been stronger than "booming" Texas, Washington state and Florida, and light years above that of competing industrial states like New York, Michigan, Ohio and Pennsylvania. ??Even more important has been California's performance in the high-tech sector. Since the early 1990s, according to economist Steven D. Levy, California has gained market share in everything from computer services to medical instruments, biotechnology and communications equipment. Despite losses in aerospace and electronic-component manufacturing, the state's total share of the nation's high-tech jobs has risen from 19.5% in 1990 to 21.5% today. ??In addition to its core strengths in technology and entertainment, California has also expanded its national leadership in many other fields, including agriculture, international trade and even diversified manufacturing. Los Angeles and Long Beach remain the nation's leading ports, and the region has reclaimed its place as a primary destination for tourists. Overall, out-migration from the state, some 430,000 in 1993, has fallen to barely 80,000. The annual rate of net population growth, driven largely by births to residents, now stands at nearly three times the levels of the mid-1990s. ??The biggest problems on the collective California public mind are not economic collapse or racial tension but quality-of-life issues like traffic, pollution and metropolitan sprawl. Electricity and, increasingly, water shortages are symptomatic of the state's unexpectedly strong recovery. ??California is certainly not immune to the recessionary forces affecting parts of the country. Gov. Gray Davis' spotty leadership in dealing with the energy crisis poses serious short-and even mid-term problems for companies. Yet to date, there is little sign of a mass exodus of companies or people to other states. "There's a hoped-for feeding frenzy," suggests one Northern California development official, "but right now it's just hoped for." ??In sharp contrast to the early 1990s, California's unemployment has stayed relatively steady at historically low levels. Economic growth, although clearly slowing in the Bay Area, remains fairly solid throughout Southern California, particularly in the Inland Empire, which has emerged as one of the most dynamic economies in the advanced industrial world. Housing prices, except at the extreme high end, remain strong throughout much of the state. ??Other factors suggest that California won't underperform the rest of the nation or on the verge of hemorrhaging jobs and population to other states. For one thing, many of the prime beneficiaries of the last California recession--places like Denver, Portland and Seattle--no longer offer individuals or companies the cost advantages they could in the early 1990s. Similarly, these areas, themselves now leading centers of the digital economy, also boast regulatory regimes and anti-growth movements as powerful as any in the Golden State. ??At the same time, many of the lifestyle and ethnic problems associated with California-bashing in the early 1990s have spread to competitive regions. Mass in-migration to places like Las Vegas and Phoenix, both from within the nation and abroad, has transformed these cities into smaller versions of ethnically diverse, sprawling and congested California cities. "Los Angeles: America's First Third World City" was the headline on an early 1990s Arizona Republic screed, which indicated that most middle-class Anglos were looking for a way out. Now, according to one recent poll, nearly half of Phoenix's residents say they would move away if they could. ??But most important of all, Californians, despite all their doubts, seem to be adjusting, if at times uneasily, to the state's evolving character. Although significant anti-immigrant sentiment remains under the surface, most entrepreneurs and corporate strategists are not seeking to escape the state's multiracial society but instead are targeting the burgeoning Latino and Asian middle classes, which are increasingly driving the economy of virtually every urban center of the state. ??Class remains a critical issue, particularly given the skills required to adapt to a digital economy, but the widely accepted idea of California as a place of unusually intense racial and class conflict is overblown. The best advertisements for urban dysfunction are not in California but in older Eastern cities like Cincinnati, Hartford or St. Louis, all of which have continued to lose jobs and population in the past decade. In fact, since the mid-1990s, unemployment among Latinos and African Americans in California has dropped dramatically, far more than among whites. Poverty rates have fallen, too, despite the continued absorption of immigrants; the number of minority-owned businesses has mushroomed. "This is still the place," says economist Shulman, "where people from around the world go to create wealth." ??The Bush administration's parochial abuse of power and Sacramento's managerial mediocrity may help transfer dollars to Texas, but the forces of climate, culture, technology and demography ultimately favor California. New York may control the printing presses and the airwaves, but the institutional regime there cannot compete long-term with the entrepreneurial inventiveness of the Golden Sta
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