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Calif Sen Pwr Probe Committee OKs Deposing Energy Execs ?????
???Updated: Friday, July 20, 2001 08:16 AM?ET ????? ?(This article was originally published ??? ???Thursday) ?By Jason Leopold ?OF DOW JONES NEWSWIRES Contra Costa Times, July 20, 2001, Friday, STATE AND REGIONAL NEWS, K3856, ????777 words, Energy secretary, former Gov. Wilson speak on energy crisis, By ????Rick Jurgens Los Angeles Times, July 20, 2001 Friday, Home Edition, Page 25, 809 words, ????Edison Bailout Bills Remain Stalled, MIGUEL BUSTILLO, CARL INGRAM, TIMES ????STAFF WRITERS, SACRAMENTO Los Angeles Times, July 20, 2001 Friday, Home Edition, Page 1, 1233 words, ????Edison May Avert Bankruptcy Filing; Energy: Thanks to a rate increase and ????natural gas price drop, the utility's improved cash flow may cover its ????electricity costs., JERRY HIRSCH, TIMES STAFF WRITER The San Francisco Chronicle, JULY 20, 2001, FRIDAY,, FINAL EDITION, NEWS;, ????Pg. A1, 863 words, State advisers forced to sell energy stocks; ???CONFLICT: ????Holdings called unethical, Mark Martin, Sacramento The San Francisco Chronicle, JULY 20, 2001, FRIDAY,, FINAL EDITION, NEWS;, ????Pg. A19, 447 words, Democrats defy Davis with bill on PUC; ???Utilities ????panel would keep power over rates, Lynda Gledhill, Sacramento The San Francisco Chronicle, JULY 20, 2001, FRIDAY,, FINAL EDITION, ????EDITORIAL;, Pg. A24;, 295 words, More energy fallout The Associated Press State & Local Wire, July 20, 2001, Friday, BC cycle, ????3:31 AM Eastern Time, State and Regional, 648 words, PUC agrees to adjust ????electric rates if necessary, By KAREN GAUDETTE, Associated Press Writer, SAN ????FRANCISCO CBC TV, THE NATIONAL ( 10:00 PM ET ), July 19, 2001, Thursday, 1466 words, ????Power Struggle, ALISON SMITH Daily News, Los Angeles, Calif., July 19, 2001, Thursday, LD-CHEAPER-POWER, ????809 words, Cheaper Energy Undercuts California's Long-Term Power Contracts, ????By Dana Bartholomew Scripps Howard News Service, July 19, 2001, Thursday, COMMENTARY, 687 words ????, Six months later, utility debts are still toughest nut to crack, DAN ????WALTERS, SACRAMENTO, Calif. Calif Sen Pwr Probe Committee OKs Deposing Energy Execs ????? Updated: Friday, July 20, 2001 08:16 AM?ET ????? ? (This article was originally published Thursday) By Jason Leopold OF DOW JONES NEWSWIRES LOS ANGELES (Dow Jones)--A California Senate committee investigating manipulation in the state's wholesale power market approved a measure late Thursday, authorizing the committee to depose the chief executives of major energy companies to provide insight into the companies' trading practices. The Senate Select Committee to Investigate Market Manipulation voted 28-6 in favor of deposing some of the energy sector's most powerful chief executives. The move comes a day after the committee held Reliant Energy Inc. (REI, news, msgs) and Enron Corp. (ENE, news, msgs) in contempt for refusing to provide documents on its electricity trading and sales practices. The full Senate is expected to vote on the contempt charge and decide the punishment to impose. Sen. Joe Dunn, D-Santa Ana, the committee chair, would have carte blanche to depose executives, such as Enron Chairman Ken Lay, who has been singled out by Attorney General Bill Lockyer for gouging consumers in the state. Representatives of the energy companies under investigation were not available for comment. The committee has been investigating whether energy companies knowingly manipulated the state's wholesale electricity market to drive up prices and create artificial shortages. It has yet to uncover a "smoking gun." But has secured the testimony of former Duke Energy (DUK, news, msgs) power plant employees who told the committee that the company reduced output at a San Diego power plant during power emergencies to drive up power prices. The state's Independent System Operator, however, conceded that it ordered the fluctuations in capacity at the power plant. -By Jason Leopold; Dow Jones Newswires; 323-658-3874; jason.leopold@dowjones.com ??????????????Copyright 2001 Knight Ridder/Tribune News Service ???????????????????????Knight Ridder/Tribune News Service ??????????????????????????????Contra Costa Times ????????????????????????????July 20, 2001, Friday SECTION: STATE AND REGIONAL NEWS KR-ACC-NO: ?K3856 LENGTH: 777 words HEADLINE: Energy secretary, former Gov. Wilson speak on energy crisis BYLINE: By Rick Jurgens BODY: ??SAN FRANCISCO _ Two prominent Republicans came here on Thursday to promote free-market solutions to the energy crisis that has hit California and threatens to spread nationwide. ??Spencer Abraham, energy secretary in the Bush administration, only briefly mentioned the state's current troubles and instead regaled 600 attendees at a Bay Area Council banquet with the promises of new technologies. ??Earlier, former Gov. Pete Wilson focused on the past as he offered 90 people at the Public Policy Institute of California a rambling defense of the 1996 electricity industry restructuring law he signed. ??At the heart of electricity industry restructuring is a traditional Republican theme: a preference for market forces and competition over regulators and government planning. But the fate of California's electricity industry restructuring plan now rests in the hands of Gray Davis, the state's Democratic governor. ? ??Abraham never mentioned Davis. ??"I didn't come here to play the blame game," he said in a news conference. ??California's electricity problems are merely the most intense in a nation facing "rising demand, stagnant supplies and an energy (infrastructure) that is out of date and in need of repair," he said. ??Picking up on an initiative that has emerged as a priority for some advocates of restructuring, Abraham stressed the need for enhanced federal authority to meld regional networks of high-voltage transmission lines into a national grid. ??But Abraham's main pitch was that California technology companies could contribute "intellectual capital and ingenuity to the world of megawatts." ??Looking far into the new century, he offered a vision of an energy industry replete with micro turbines, fuel cells and hybrid engines. ??"Our carbon-based economy itself may pass from the scene to be replaced, perhaps, by a hydrogen- based economy," he said. ??Wilson's concerns were more prosaic. He defended restructuring _ now plagued by soaring prices and rolling blackouts _ as a step forward from the previous structure, where electricity came from regulated monopolies. ??"There were flaws," Wilson said of the restructuring bill that he signed into law in 1996. "I acknowledge that. They were less important than launching California on the path to deregulation." ??Restructuring was the only way to bring down power costs that were higher than in other states, and to break a regulatory logjam that had limited power plant development, he said. ??Wilson criticized the law's retail rate freeze. Although it triggered a financial crisis for the state's utilities, the freeze was largely "a self-inflicted wound," insisted upon by utilities seeking to be repaid for costly investments in nuclear plants and contracts with small generators, he said. ??Wilson also said it had been a mistake to forbid the utilities to sign long-term contracts with generators. Those were ruled out because regulators feared such contracts would give utilities an unfair advantage as competition developed, he said. ??Noting that he had been singled out for criticism by Davis, Wilson fired back, saying that Davis had been too slow to invoke the "virtually dictatorial" powers that the governor has in emergencies, including electricity shortages. ??But Wilson expressed some sympathy for Davis, noting that the Legislature would not have allowed faster power plant siting and construction without a crisis. ??He also grudgingly complimented his successor's political skills. ??"I admire Gov. Davis' ability to conduct public relations," Wilson said, noting that a visit by President George W. Bush had turned into an "absolute public relations triumph for the governor." ??Wilson echoed some of Davis' themes. Under presidents Clinton and Bush, the Federal Energy Regulatory Commission's response to the crisis had been "a bit slow off the mark," Wilson said. ??There remain "unanswered questions" about the role of natural gas suppliers, and whether shortages and high prices in California resulted from "artificial or real constraints on pipeline capacity," he added. ??Generators, while not the cause of the crisis, should also be held to account. ??"If people have been guilty of gouging, they should pay up," he said. ??Wilson said the current troubles are a symptom of the state's failure to plan for growth. The electricity crisis "will be dwarfed in the future by a water crisis," he warned. ??ARCHIVE PHOTOS on NewsCom (from KRT Photo Service, 202-383-6099): ??SPENCER ABRAHAM ??KRT CALIFORNIA is a premium service of Knight Ridder/Tribune ??© 2001, Contra Costa Times (Walnut Creek, Calif.). ??Visit the Contra Costa Times on the Web at http://www.cctimes.com/ JOURNAL-CODE: CC LOAD-DATE: July 20, 2001 ??????????????????????????????6 of 39 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ??????????????????????July 20, 2001 Friday ?Home Edition SECTION: Part A; Part 1; Page 25; Metro Desk LENGTH: 809 words HEADLINE: Edison Bailout Bills Remain Stalled BYLINE: MIGUEL BUSTILLO, CARL INGRAM, TIMES STAFF WRITERS DATELINE: SACRAMENTO BODY: ??Leading lawmakers conceded they would probably leave on their summer break without passing legislation aimed at rescuing Southern California Edison from its financial straits as competing bailouts stalled in the Legislature Thursday. ??The Assembly is expected to consider one of two rival measures to save Edison today, and the Senate is expected to take up an Edison rescue deal of its own. ??But all three pending measures face long odds and none have sufficient support to clear both houses, legislative leaders said. ??With the Legislature set to quit for the summer as early as today, the leaders predicted they would be forced to continue negotiations during the monthlong recess in hopes of brokering a deal. ??"I can't imagine that in the next 24 hours" lawmakers will reach consensus on an Edison rescue, said Assemblyman Fred Keeley (D-Boulder Creek), who coauthored one of the lower house's rescue bills with Assembly Speaker Bob Hertzberg (D-Sherman Oaks). ??One indication of the lack of enthusiasm for the legislation is that Keeley himself does not support the measure that bears his name. "I don't believe that this bill in its current form should become law," he said. "This bill is not ready." ??The maneuvering in both houses Thursday capped a day of frenetic activity in the state Capitol, which has become flooded with cell phone-carrying lobbyists seeking to influence the Edison deal for seemingly every special interest in the state. ??Yet amid the flurry of action, there seemed little chance of actually making law. Many of the participants said the legislative debate appeared to be less an attempt to pass a bill than a war of one-upsmanship between the houses to see who could "lob a grenade" into the rival house and go home until August. That way, if Edison soon winds up in Bankruptcy Court, leaders of each house could argue they were not to blame. ??Hoping to head off a growing sentiment among lawmakers that bankruptcy may not be such a bad alternative, Gov. Gray Davis spent the day working the phones in hopes of persuading legislators that a government rescue of Edison would be good for the state. ??To avoid mass blackouts, California has been purchasing billions of dollars worth of electricity since the beginning of this year because the state's two largest private utilities, Edison and Pacific Gas & Electric, are no longer credit-worthy enough to buy power on behalf of their customers. ??The utilities lost that status and ran up billions in debt the last two years because they were paying high prices for power on the wholesale market and could not recover those costs from customers because of a state-imposed rate freeze. ??As a result, the state government is stuck in the power-buying business until the utilities regain their financial footing--an expensive predicament that threatens the state's financial health. ??Davis attempted to head off the crisis by negotiating rescues of the two utilities, but PG&E lost faith in the talks and opted to take itself into Bankruptcy Court in April, embarrassing the Democratic governor. ??Days later, Davis reached a tentative rescue deal with Southern California Edison. But the plan hit the Legislature with a thud amid concerns it was overly generous to Edison, and it has languished for months. ??Last week, lawmakers finally picked up the pace and began moving forward with a series of competing proposals to alter the governor's deal with Edison. But it was clear from the outset that no consensus had emerged, and many lawmakers are becoming convinced that legislative inaction--even if it means bankruptcy--may be the best way to resolve Edison's financial predicament. ??"We're bailing out people who don't need to be bailed out," said Sen. Ross Johnson (R-Irvine). ??Legislative leaders hoped to pass something before today when the Assembly and Senate are scheduled to break for their traditional summer recess. The date is considered important because Edison and Davis had set an Aug. 15 deadline for lawmakers to take action on the rescue deal. If no bill is passed by then--as seems likely--the utility has the right to walk away from negotiations. ??However, it became evident Thursday that the dueling measures making their way through both houses lacked strong support. ??In the Assembly, the Hertzberg-Keeley bill, a modification of Davis' original plan, was competing against a rival bill by Assemblyman Rod Wright (D-Los Angeles), who had teamed with Republicans to push what he bluntly called a "straight bailout" of Edison. ??In the Senate, Davis' original plan was amended by Sen. Byron Sher (D-Stanford) and turned into a trimmed-down rescue plan that was opposed by Edison. ??Sher's bill was voted down twice in policy committees Wednesday and Thursday, but it was resuscitated both times, and is now on the Senate floor. LOAD-DATE: July 20, 2001 ??????????????????????????????7 of 39 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ??????????????????????July 20, 2001 Friday ?Home Edition SECTION: Part A; Part 1; Page 1; Financial Desk LENGTH: 1233 words HEADLINE: Edison May Avert Bankruptcy Filing; Energy: Thanks to a rate increase and natural gas price drop, the utility's improved cash flow may cover its electricity costs. BYLINE: JERRY HIRSCH, TIMES STAFF WRITER BODY: ??For the first time in months, Southern California Edison is collecting more money than it is spending on electricity, a shift that could enable the utility to avoid bankruptcy without a state intervention as dramatic as the proposed $ 2.8-billion purchase of the company's transmission lines. ??The turnabout has come during the last several weeks as natural gas prices--a major component in the cost of electricity--have plummeted and as Edison has collected more money from customers through a record increase in rates approved by state regulators. ??The utility this month expects to collect more than it will spend on electricity--the first time that has happened since the state's power crunch started in May 2000. If the trend holds, Edison would be able to cover several hundred million dollars in losses that piled up after Feb. 1 from its purchases of electricity, said executives at the Rosemead-based company. ??Edison's relief comes against a backdrop in which the California power crisis appears to be easing, as consumers conserve energy, new power plants come online and wholesale prices moderate from the high levels of last winter. ??The executives said that barring an unusually severe heat wave, which would prompt customers to crank up energy-guzzling air conditioners, or another spike in natural gas prices, Edison by early next year also could make payments on a proposed bond offering to pay down its $3.5 billion in debt from energy purchases before Feb. 1. ??Creditors of the utility and consultants working with the governor's office agree that such a scenario could mean that Edison would be able to stay out of U.S. Bankruptcy Court without the state buying the company's transmission lines, which is a key element in Gov. Gray Davis' now-stalled proposal to rescue the utility. ??Jim Scilacci, the utility's chief financial officer, has hinted at improving company finances during conference calls with creditors holding $931 million in defaulted bonds and notes in recent weeks. Investors have responded positively, boosting the company's depressed stock price about 45% in the last six weeks to a Thursday close of $14.70 on the New York Stock Exchange. ??Although Edison's cash flow may be enough to cover its electricity costs, its huge debts keep it far from solvency. Moreover, the company still faces two wild cards in its fight to avoid bankruptcy: California's own claims on that cash and the utility's uncertain prospects of gaining state approval to use the money to repay its debts. ??The Department of Water Resources is buying electricity for 27 million Californians served by Edison and the state's two other regulated utilities. The agency could disclose as soon as today how big a slice it will take from Edison's rate collections to repay a proposed $13.4-billion bond offering to cover the state's purchases. ??The water agency began buying electricity from private generators in January, after Edison and Pacific Gas & Electric Co., the Northern California utility, became mired in debt. PG&E went on to file for bankruptcy protection in April. ??"What this means for Edison all depends on how much money it can keep," said Paul Patterson, an analyst with investment bank ABN Amro in New York. ??The water department's requirements could eat up much of the margin that has provided Edison with its small cushion this month. However, Joseph Fichera, chief executive of Saber Partners, which is advising the governor, said the latest numbers indicate that there is enough money in current rates to implement the governor's plan to pay for the utility's debt as well as the state's current and future power purchases. ??Even if the water department allocation still left room for Edison to pay off its debts, such a course of action would require approval by the state Legislature and the Public Utilities Commission. Although energy trends appear to allow the utility to regain its financial footing, analysts cautioned that the utility still could find itself in Bankruptcy Court if the state doesn't provide a method for Edison to pay its debts. ??"While we might be able to cover our costs going forward, it is equally important that we have a way to pay off that $3.5-billion debt," said Brian Bennett, an Edison vice president. "But without knowing what [the water department's] revenue needs are, we won't know what is left over in rates to cover our costs." ??Bennett blamed the utility's so-called under-collection--debts that piled up as frozen consumer rates could not cover soaring wholesale electricity costs--on what he called "flawed regulatory policies." ??Based on recent energy prices, Bennett said, "We are just only beginning to repay the under-collection." ??The recently enacted rate increases, which kicked in last month, have pushed what Edison can charge customers for the electricity component of their bills from about 7 cents a kilowatt-hour to 10.27 cents. ??At the same time, declining natural gas prices have sliced in half what the utility must pay to a group of small and alternative-energy companies that generate about 27% of its electricity needs. Edison, for example, paid this group 18.6 cents a kilowatt-hour in February. That dropped to 13.6 cents by May and now stands at about 7.5 cents. Each penny decline in the cost of electricity from this group of generators represents more than $200 million in savings for Edison on an annual basis. ??Bennett cautioned that if the water department requires additional funds or if Edison's energy costs were to turn upward again, "then rates once again may not be adequate to cover our generation costs. It is therefore imperative that this uncertainty in the rate structure be cured now so we establish predictable, stable rates for our customers." ??Three plans to aid Edison to varying degrees are working their way through the Legislature, though late Thursday it appeared none would be approved before lawmakers adjourn for a summer recess. Several legislators have said they are content to let Edison join PG&E in bankruptcy. ??Any plan that would allow Edison to use a portion of the rates it is collecting to pay off a bond offering would meet the objection of some consumer groups, which label the concept a corporate bailout. ??"Just as the utilities gambled on deregulation and were winners at first, Edison now has to be responsible for its losses," said Harvey Rosenfield, president of the Foundation for Taxpayer and Consumer Rights in Santa Monica. He said Bankruptcy Court is the most appropriate place for Edison to resolve its financial problems. ??Several creditors of the utility, however, said that as long as Edison can tread water or even work down its debts, there is little incentive to put the company into bankruptcy, which would only add another legal layer and more expenses to an exceptionally complicated situation. ??Creditors could move against the company if they believed its finances were declining and thus shrinking the amount of cash and assets that could be distributed in a bankruptcy proceeding. They also could put Edison into involuntary bankruptcy if some creditors exacted payment from the company ahead of others that are owed money. ??MORE INSIDE ??Powerful computers: Regulators will track real-time prices. A24 ??Edison on hold: Hopes dim for bailout bill before summer recess. A25 LOAD-DATE: July 20, 2001 ??????????????????????????????8 of 39 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ?????????????????????JULY 20, 2001, FRIDAY, FINAL EDITION SECTION: NEWS; Pg. A1 LENGTH: 863 words HEADLINE: State advisers forced to sell energy stocks; CONFLICT: Holdings called unethical SOURCE: Chronicle Staff Writer BYLINE: Mark Martin DATELINE: Sacramento BODY: One consultant hired by the state to negotiate long-term electricity contracts owned stock in a company that signed billion-dollar deals with California. ???Another fresh hire bought more than $10,000 in stock in Enron Corp. -- the Houston power trader frequently vilified by Gov. Gray Davis and lawmakers -- as he helped the state develop electricity buying strategy. ???A top Davis lawyer told the two consultants and seven others on Wednesday morning to sell off stock in companies like Enron and Calpine Corp. within four hours or lose their jobs. ???Having a financial interest in electric companies while working for the state on power issues was not ethical, said Barry Goode, Davis' legal affairs secretary, in a memo. ???All nine complied with the directive, said Davis spokesman Steve Maviglio said, but controversy intensified yesterday over whether some of the state's hired guns managing the energy crisis have conflicts of interest. ???The stock investments have come to light in the past week as 35 consultants hired by the state to buy and schedule power and to negotiate energy contracts have submitted documents detailing their personal finances. ???Most of the consultants who owned stock list their jobs as schedulers -- those who schedule electricity deliveries after power has been purchased. ???But others more directly involved with power trading also owned stock in energy companies, documents show. ???Richard Ferreira earns $200 an hour to help negotiate and manage the state's long-term contracts with power companies. He started his job Jan. 31. ???According to Ferreira's financial statement, he owned between $2,000 and $ 10,000 worth of stock in Calpine Corp. -- the company based in San Jose that announced on Feb. 28 it had signed two long-term contracts with the state worth $8.3 billion. ???Ferreira could not be reached for comment, and spokesmen for the Department of Water Resources, which hired the consultants, said he did not know if Ferreira worked on the Calpine contracts. ???Another consultant, Richard Nichols, bought between $10,000 and $100,000 worth of stock in Enron in April -- more than three months after his company signed on with the state to help "in the procurement of power supplies," according to his job description. The stock buy came at a time when the Federal Energy Regulatory Commission was taking a hard line against wholesale electricity price caps for California. ???Nichols' company, Navigant Consulting, Inc., could make as much as $800,000 for its work for the state this year. Nichols could not be reached for comment. ???Citing invoices from Controller Kathleen Connell's office, Secretary of State Bill Jones, an announced GOP candidate for governor, argued that there are at least seven other Navigant employees who are billing the state for work on energy issues. None of them have disclosed their financial interests. ???Jones said he takes issue with the Davis administration's decisions on who should file financial statements and who should be exempt. ???FINANCES NOT DISCLOSED ???Several consultants, including two Wall Street firms that made $275,000 a month to negotiate the state's attempts to bail out troubled public utilities, have not disclosed their finances because Davis officials have concluded they do not fit the definition of a consultant. ???Jones has suggested that the state's long-term deals with several companies to deliver electricity might be invalid if negotiators had a financial stake in those companies. ???Maviglio said Davis officials were investigating whether there had been any direct conflicts. The state attorney general's office and the state's Fair Political Practices Commission also are reviewing Jones' allegations. ???Maviglio and a spokesman for the state's Department of Water and Power could not say yesterday whether new employees were asked before they were hired whether they had any financial stake in the energy market. ???STOCKS SOLD VOLUNTARILY ???But some consultants acknowledged a potential conflict and got rid of stocks before this week. In his filing, Mark Skowdronski reports owning more than $ 10,000 worth of Reliant Energy stocks when he began his job in March of negotiating long-term contracts for the state. When he was given the task of negotiating with Reliant, he said he sold his stock on March 20. ???Jones has stopped short of accusing anyone of criminal activity. And a letter from Attorney General Bill Lockyer to Jones notes that the consultants would have to own more than 3 percent of a company they dealt with to be prosecuted criminally. ???Maviglio said the accusations come from a man who is launching his run for Davis' job next year. ???"This is all politics," said Steve Maviglio, Davis' press secretary. "We're following the law." ???He said that when the state was forced to enter the business of buying power earlier this year, officials had to quickly hire people who knew the energy business, including some who still had investments in power companies. ???"If you want a plumber, you hire a guy who has plumbing experience," Maviglio said.E-mail Mark Martin at markmartin@sfchronicle.com. LOAD-DATE: July 20, 2001 ??????????????????????????????9 of 39 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ?????????????????????JULY 20, 2001, FRIDAY, FINAL EDITION SECTION: NEWS; Pg. A19 LENGTH: 447 words HEADLINE: Democrats defy Davis with bill on PUC; Utilities panel would keep power over rates SOURCE: Chronicle Sacramento Bureau BYLINE: Lynda Gledhill DATELINE: Sacramento BODY: Lawmakers moved with lightning speed yesterday to undo a plan that would force California regulators to raise electricity rates whenever state power buyers deem it necessary. ???A hastily introduced bill pits Democratic lawmakers against the administration of Gov. Gray Davis, which is counting on the state Public Utilities Commission to approve rate increases to pay for electricity without questioning whether the state got a good price. ???Historically, utilities bought their electricity and asked the PUC to approve rate hikes. The PUC decided whether the requests were justified. ???But with the utilities now deeply in debt and the state buying electricity, the old system has broken down. This week, the PUC issued a draft agreement that would guarantee the state would get as much money as it needs to pay for the electricity it is buying. ???Consumer advocates said the proposed agreement would force the PUC to cede its responsibility to protect customers from unreasonable rate increases. ???Senate leader John Burton, D-San Francisco, called the agreement "overreaching" by the governor's Department of Water Resources, which is buying the state's power. ???Under Burton's bill, consumers would still have to repay $13.4 billion in bonds that the state plans to float to cover its purchases. But the bill would allow the PUC to scrutinize the state's expenses beyond those covered by the bond -- costs mounting to billions of dollars over the next 15 to 20 years. ???The bill passed out of two committees with bipartisan support yesterday and now faces a vote by the full Senate. Both business and consumer groups expressed their support for the measure. ???"This is better for ratepayers," said Lenny Goldberg of the Utility Reform Network. "It makes the bond issue secure and gives a chance to look into all of the contracts." ???PUC Commissioner Richard Bilas said some change is needed to restore commission oversight. ???"The only check and balance on the Department of Water Resources as it is would be the governor," Bilas said. "I think it takes a different branch of government to do that oversight." ???But Bruce Van Dusen, a lawyer hired by the Department of Water Resources, said Burton's bill could delay the bond sale and jeopardize the general fund. ???The concern is that while Burton's bill guarantees that the bond issue would be repaid, it does not spell out how all the long-term electricity contracts that the state has signed will be covered. The contracts stipulate that the generators will be paid through electricity rates.Chronicle staff writer Bernadette Tansey contributed to this report. / E-mail Lynda Gledhill at lgledhill@sfchronicle.com. LOAD-DATE: July 20, 2001 ??????????????????????????????10 of 39 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ?????????????????????JULY 20, 2001, FRIDAY, FINAL EDITION SECTION: EDITORIAL; Pg. A24; EDITORIALS LENGTH: 295 words HEADLINE: More energy fallout BODY: THEY SAY nothing is fair in love and war. It isn't. But nor is it fair when it comes to energy. ???In Washington, Vice President Dick Cheney, champion of the drill-and-burn industry, asks the Navy to foot the electric bills for his mansion. ???At the same time, the vice president refuses to disclose the costs incurred by his energy task force or to reveal the hot shots from the oil and gas industry who helped shape its final policies. ???Closer to home, California residents brace for the aftershocks of the energy crisis. With the state now locked into secret, long-term and costly energy contracts, it is the public -- not the energy suppliers who made out like bandits -- who will be burdened by the billions spent purchasing electricity. ???At present, only 39 percent of those surveyed approve of the way Gov. Gray Davis has handled this crisis. Approval may drop even lower when California residents absorb the astonishing news that we suddenly enjoy an energy surplus and that our state is now selling it on a glutted market. ???Add to the disgruntled those folks who were already in the habit of shutting off lights and lowering their thermostats. For them, the mail brought no 20 percent rebate on their electricity bill. It is the watt hogs, who never lowered the air conditioner and left lights burning all over their homes, whose paltry efforts netted them the governor's award. ???Give the governor credit for keeping the lights on in California. But his less-than-bold decisions will result in serious political and economic consequences. Soon, we will have to confront the grave reality that we have mortgaged many of our dreams for expanded health care, improved education and support for the mentally ill for a future burdened by crushing debt. LOAD-DATE: July 20, 2001 ??????????????????????????????11 of 39 DOCUMENTS ???????????????????The Associated Press State & Local Wire 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 20, 2001, Friday, BC cycle ?????????????????????????????3:31 AM Eastern Time SECTION: State and Regional LENGTH: 648 words HEADLINE: PUC agrees to adjust electric rates if necessary BYLINE: By KAREN GAUDETTE, Associated Press Writer DATELINE: SAN FRANCISCO BODY: ??When the California Department of Water Resources asks the Public Utilities Commission to raise electric rates, the PUC no longer will be able to refuse if it feel those hikes are unjustified or are not in the public's best interest. ??So reads a proposal between the DWR and the state Public Utilities Commission released earlier this week that could go into effect next month and has both PUC members and public advocacy groups worried. ??"This gives an unelected unaccountable state agency ... the unilateral right to order rate increases for the next 15 years," Harvey Rosenfield, President of the Foundation for Taxpayer and Consumer rights said earlier this week. "Every mistake they could possibly make will also be passed along to ratepayers." ??The numbers that will indicate whether the state will need to try out the proposed process are scheduled to be released by the DWR on Friday. Loretta Lynch, PUC president, and Oscar Hidalgo, a DWR spokesman, both said they believe current electric rates cover the state's power buying costs for now. ??But the thought of a state agency potentially hitting residents and businesses in the pocketbook without any oversight so troubles Sen. John Burton, D-San Francisco, that he is pushing legislation that would retain the PUC's authority to say no. ??Since January, the DWR has spent more than $8 billion buying electricity for the customers of three financially ailing utilities. It will likely spend $43 billion to supply Californians with electricity over the next 20 years. ??The PUC raised rates twice already this year, money which the utilities pass along to the DWR to help it pay its debts. But in order for the state to issue some $13 billion in bonds later this summer, it must show Wall Street that it has a solid stream of money rolling in that will cover its power-buying needs. Ratepayers will pay off those bonds over 15 years, and state officials say a solid revenue stream could help keep interest low. ??The PUC/DWR proposal gives the DWR - a state agency whose director is not elected, critics point out - the ability to ask for rate increases that would essentially be rubber-stamped by the PUC with a 30 to 90 day turnaround. ??"This authority to pass through costs without CPUC review would never be permitted for costs incurred by a utility," Burton wrote. ??Burton's bill would set aside a certain amount of ratepayer revenue to go to DWR, rather than steering the entire amount in its direction. ??Power buying expenses and administrative costs would be reviewed by the PUC and the public to determine if it is appropriate to raise electric rates to fund them. ??The bill would also retain the right of Californians to have someone other than their local utility provide their electricity, a tenant of deregulation which the PUC has seemed likely to end. ??In May, the PUC issued a record rate increase that raises electric rates by roughly 38 percent for residential ratepayers who use the most power, and by varying amounts for farmers and businesses. That followed a roughly 10 percent rate hike in January. ??The state has bought electricity for the customers of Pacific Gas and Electric Co., Southern California Edison Co. and San Diego Gas and Electric Co. since January, when the utilities warned the state that high power prices and the inability to recoup their costs through frozen electric rates were driving them into debt. ??PG&E filed for federal bankruptcy protection April 6. Edison and SDG&E both have agreed to sell their transmission lines at above market value to the state for to make up for their losses, though the Legislature has not decided whether to approve the deals. ??The PUC will take comments on the agreement until Aug. 1. ??On the Net: ??http://www.dwr.ca.gov ??http://www.cpuc.ca.gov ??http://www.pge.com ??http://www.sce.com ??http://www.sempra.com LOAD-DATE: July 20, 2001 ??????????????????????????????22 of 39 DOCUMENTS ???????????????Copyright 2001 Canadian Broadcasting Corporation ????????????????????????????????????CBC TV ??????????????????????SHOW: THE NATIONAL ( 10:00 PM ET ) ???????????????????????????July 19, 2001, Thursday LENGTH: 1466 words HEADLINE: Power Struggle ANCHORS: ALISON SMITH BODY: ??ALISON SMITH: Oil. Gas. Alberta. Three words often said in the same breath. But it's coal that supplies the province with most of its electricity. A plentiful resource with enormous potential. Especially for export to the United States. Canada's largest private power company TransAlta is planning a huge expansion to one of its coal fired plants. But it's a plan that's meeting plenty of resistance. Here's the CBC's Margo McDiarmid with the power struggle. ??TYKE DREVER: It used to be where the kids used to play in the sand and the level of the lake was basically right here. At that point in time I could bring my motor boat into here and actually winch it into the boathouse for the winter. Now if we look in the distance behind me, you'll see how far out my motor boat is now. ??MARGO MCDIARMID: Tyke Drever has seen his lake change a lot over the years. The water is simply disappearing. ??DREVER: That used to all be lake bottom. That was all lake bottom. There was water covering all that but not has turned into green grass. ??MCDIARMID: Drever's home is on Lake Wabamun, about 75 kilometers west of Edmonton, one of the region's most popular recreation spots. It's also the site of three coal fired power plants owned by TransAlta, two of them right on the lake. The coal comes from the mine right across the bay. Drever and his neighbours have an on-going battle with TransAlta, Canada's largest private power company. They blame TransAlta for blocking streams that drain into the lake, for sucking up water to make power. ??DREVER: I think it would be fair to say that probably the mining is the starting point of the problems because nobody knows what in actual fact, what the mining has done to the natural mother nature's inflow, influx of water into the lake. ??MCDIARMID: And now there'll be an even larger power plant just down the road. TransAlta wants to double the size of its Keephills plant, adding two new generators like these. Alone they'd be enough to power a city the size of Edmonton. ??LINDA DUNCAN (Wabamun Lake Resident): I'd rather have the lake back. ??UNIDENTIFIED MAN (1): I'd rather have the lake back too. ??MCDIARMID: Drever and other members of a local group don't like the thought of an even bigger power plant nearby. ??DREVER: They will say that the Keephills plant is outside of the watershed area of the Lake Wabamun. Question mark. We don't know that. ??BOB CALHOON (Wabamun Lake Resident): It scares me. ??MCDIARMID: Why is that? ??CALHOON: Because we've seen the damage that is done now with the plants we have here now. What kind of damage is going to be done when they expand these plants even greater than they are now? ??MCDIARMID: TransAlta hasn't built a new plant in years because of uncertainty over deregulation. Now the rules are clear. Power is bought and sold by private companies. With an energy shortage in Alberta, TransAlta is ready to expand. ??MIKE KELLY (TransAlta): We have such a shortage of electricity and demand is so high that we thought we really had to move, to do something about that, to fill the gap. ??MCDIARMID: TransAlta says most of its new power will stay in Alberta. Any extra will be exported to B.C. and then possibly to California. But Americans want more from any Alberta company willing to sell. With natural gas prices going up, cheap Alberta coal power is a hot item. ??MURRAY SMITH: When the Americans come to visit you, they don't come for tea. And they want things. ??MCDIARMID: Energy Minister Murray Smith says Alberta will help them out. At a recent gathering of energy ministers, Smith pointed out the province is ready to cash in on the export business. ??SMITH: I think that exports are actually, in the long run, a good thing for Alberta. To be able to reach out with exports allows us to build the grids, build the inner connects and then allows us to generate more power that will give Albertans lower prices. ??MCDIARMID: And they're already lining up to buy Alberta's power. The National Energy Board is now juggling seven applications for export licenses to bring power from Alberta to the U.S. and more than half are from big American companies. One of the largest is Morgan Stanley, an international investment bank based in New York. Morgan Stanley wants a 20 year export license from the National Energy Board. The plan? Buy up extra power in Alberta and sell it to California. ??BRIAN STAZINSKI (Clean Air Coalition): I think they're profiteers. They're coming in here and asking for about three percent of our supply to sell to the United States and when we ask them where are you getting supplied from, they go, hm, we don't know. We don't care. We're just going to get a piece of the action and make some money on this. What's cost effective about continuing to generate all kinds of emissions? ??MCDIARMID: Brian Stazinski is an environmentalist, named on of Time Magazine six heroes of the planet for his work with conservation. But now he's taken on new work. To stop Morgan Stanley's export application and others like it. Because exports mean building more plants and burning more coal. ??STAZINSKI: It's just fast track approval all the way to the bank. And so we're going to see a lot of developments if the Morgan Stanley's get their way. I don't think the people of Alberta understand that. ??PAT SPILSTEAD (Wabamun Lake Resident): So many of these things are now sensible. ??MCDIARMID: The residents of Wabamun Lake understand it. They just have to look out the window. TransAlta is expanding one plant now. The power will mostly stay in Alberta. But no one around this table thinks it will stop there. ??DREVER: At five or six applications a year, it's not unreasonable to assume that there might be eight plants around the shore of this lake. I mean where does it stop? ??DUNCAN: We're swamped and we keep saying who's there in the Government of Alberta and the Government of Canada to represent the interests of the public of Alberta? ??SPILSTEAD: Where do the economics become more important than the environment. Now we're an isolated little problem, but maybe a perfect example of a great intrusion on the Alberta environment. ??MCDIARMID: And critics say the environment will pay the price. Alberta coal is considered cleaner because it has low amounts of chemicals that cause smog. But burning it still creates a long list of toxins like particulants -- tiny bits of dust that can lodge in the lungs. They're considered a toxic substance. Coal power increases carbon dioxide linked to global warming. And then there's mercury. It's linked to birth defects and nerve damage. New research by federal committee on mercury shows that among the provinces, Alberta's coal plants generate 41 percent of all the mercury in the country, the highest rate in Canada. Environmentalists are pushing for a public debate on exporting power. ??STAZINSKI: They should have a say about whether or not we should be digging up our farm land, burning the coal, getting all of the emissions so that the Americans can get the benefits of the electricity. People of Alberta should have an opportunity to say whether or not that's a good idea. ??UNIDENTIFIED MAN (2): Anything you didn't understand or anything you need to clarify? ??MCDIARMID: Power companies are well aware the public is nervous. ??UNIDENTIFIED MAN (3): I was just wondering how much increase of mercury... ??MCDIARMID: TransAlta is hosting meetings to answer questions. It's promising the Keephills plant will use state of the art technology to keep its pollution to a minimum. ??KELLY: There are new standards that have been put in place by Alberta environment and we're going to meet those standards and we're going to put on some, some pretty solid technology actually to control our emissions. ??DREVER: Come on, Kilt ???Come on ???That a girl ??MCDIARMID: It will get busier in the Lake Wabamun area. TransAlta wants to open its bigger plant in four years. The company says the Keephills plant and the mine are too far away to affect the lake. In fact, it's now putting some of the water back to raise the level. Tyke Drever would like to think that's true. ??DREVER: Wouldn't it be wonderful if in my lifetime I could see this water lapping at those piers again, lapping at those railway ties again? And my kids' kids playing in water at the edge here. Kiltie ???Come on Kilt ??MCDIARMID: Drever is also realistic. He knows there's a big thirst for electricity. It's very political. New projects will be hard to stop. And he wonders what price in the end Alberta will have to pay for its power. ??DREVER: It's raining. It's raining a little bit. ??MCDIARMID: For The National, I'm Margo McDiarmid in Wabamun Lake, Alberta. ??SMITH: We'll be back in a moment with a program note. ??(COMMERCIAL BREAK) LOAD-DATE: July 20, 2001 ??????????????????????????????27 of 39 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune Business News ???????????????????????????Copyright 2001 Daily News ???????????????????????Daily News, Los Angeles, Calif. ???????????????????????????July 19, 2001, Thursday KR-ACC-NO: LD-CHEAPER-POWER LENGTH: 809 words HEADLINE: Cheaper Energy Undercuts California's Long-Term Power Contracts BYLINE: By Dana Bartholomew BODY: ??California suddenly faces an energy surplus, forcing the state to sell power it bought for an average of $ 138 per megawatt for as little as a dollar, electricity traders say. ??In fact, the state has sold its unused power so cheaply that the Los Angeles Department of Water and Power -- which has made tens of millions selling power to the state during the crisis -- has become an occasional buyer of power from the state at rates below its normal costs. ??State officials acknowledged that cool temperatures and the surprising success of conservation efforts have glutted the energy market in the past week but they dismissed the surplus as a "blip." ??They said they are getting $ 15 to $ 30 per megawatt for up to 6,000 megawatts a day during the early-morning hours -- losing millions of dollars on power purchased in recent months under long-term contracts. ??"Both $ 1 and $ 5 have occurred," said Gary Ackerman, executive director of the Western Power Trading Forum, which represents many generators and utilities that sell millions in power to the state each day. ??"It gives Californians a great glimpse of what happens when the state moves into private industry. They (legislators) do the right thing politically, and it backfires economically," he said. ??Critics say the state, in an effort to capture runaway wholesale energy costs this spring, locked in power at too high a price. Ultimately, ratepayers of such private utilities as Southern California Edison, will be forced to pick up the tab. ??"We think it's an outrage," said Kris Vosburgh of the Howard Jarvis Taxpayers Association. "The governor went willingly into these agreements and tried to prevent the public and the press from seeing them (and) didn't ask for public or expert participation. ??"Now it's the ratepayers that are paying for his mistake." ??The state, assisted by former Los Angeles DWP General Manager David Freeman, has negotiated more than $ 42 billion in such contracts that stretch as far as 2021. ??State officials disputed the rock-bottom rates quoted by forum traders. ??"I'm looking at the average price, and (it) far exceeds a dollar," said Oscar Hidalgo, spokesman for the state Department of Water Resources, which now spends $ 30 million a day on power, down from $ 65 million in May. ??"This is an overall blip on our picture here." ??Gov. Gray Davis defended the state's purchases, saying through spokesman Steve Maviglio that they had stabilized the market. ??"Like we said all along, we're doing everything within our power to control the situation and stabilize things," he told The New York Times. "But the weather is not within our control. When the utilities were in this business, they ran into this situation routinely." ??While the state once spent most of its money for energy on the volatile spot market, it currently buys 95 percent of its power under long-term contracts. ??Unlike natural gas, electrical energy can't be stored and must be passed on. When usage fails to meet expected demand, during a cooler summer for example, suppliers are forced to accept whatever price they can get for the surplus -- sometimes at a loss. ??Some of that loss, Hidalgo said, was to pay back power loans from the federal Bonneville Power Authority in Washington state. ??While the state admitted shedding up to 20 percent of its power since July 11, Ackerman said that up to 6,000 megawatts a night of surplus power was previously "laid off." ??Selling surplus power is common to any utility -- or acting utility -- in the energy business. California Energy Markets, a trade weekly, said the state sold such power July 12 at $ 25 a megawatt. ??Critics have called the state contracts with 42 energy generators turkeys for locking in power purchases at $ 138 per megawatt hour, or $ 70 long-term. ??"The state was in a terrible bargaining position at the time (it wrote the contracts)," said Pasadena Councilman Sid Tyler, chairman of the Deregulation Committee for the Pasadena Water and Power Department. ??"There's nothing quite as bad as having to buy high and sell low -- we all know the consequences of that, long-term." ??Assemblyman Keith Richman, R-Granada Hills, has written an alternative bill to rescue Southern California Edison that he said has a provision to scrap the state's energy contracts. ??Richman, who had sued the state to release details of the contracts, said an estimate from the state Controller's Office pegs them closer to $ 50 billion. ??"I am very concerned we have entered into these long-term contracts that will not only cause an excess of power, but will cost the ratepayers for years to come and be a burden on the back of Californians." ??----- ??To see more of the Daily News, or to subscribe to the newspaper, go to http://www.dailynews.com/ JOURNAL-CODE: LD LOAD-DATE: July 20, 2001 ??????????????????????????????33 of 39 DOCUMENTS ?????????????????????Copyright 2001 Scripps Howard, Inc. ?????????????????????????Scripps Howard News Service ???????????????????????????July 19, 2001, Thursday SECTION: COMMENTARY LENGTH: 687 words HEADLINE: Six months later, utility debts are still toughest nut to crack SOURCE: Scripps-McClatchy Western Service BYLINE: DAN WALTERS DATELINE: SACRAMENTO, Calif. BODY: ??When Gov. Gray Davis and other state politicians finally became engaged in the energy crisis last January - a half-year late - the state's major investor-owned utilities had already amassed more than $13 billion in debt from runaway power costs and were out of credit. ??Davis and the Legislature launched a massive state power purchase program, a speed-up of new power plants, conservation subsidies and other actions, not all of which have successful. But everyone involved knew that the utilities' debts, which had driven them to the brink of bankruptcy, would be the most complex and politically difficult aspect of the crisis. ??Six months later, that's still true. ??An administration team negotiated for weeks with Pacific Gas and Electric and Southern California Edison on schemes to retire their debts and bring them back to a creditworthy status. The talks with PG&E went nowhere and three months ago, the huge San Francisco-based utility filed for bankruptcy. Davis, clearly concerned that Edison would follow, hammered out a deal with the smaller utility within hours. ??It was, by any standard, a sweet deal for Edison and its parent company, Edison International, too sweet for just about everyone in the Legislature, and immediately efforts began to change it. ??Edison lobbyists worked the Legislature and the utility cranked up a massive advertising and public relations campaign, to no apparent avail. And Davis, oddly, pulled back from the fray. The governor concentrated on another aspect of the crisis with greater political sex appeal: demanding that generators, many of whom are PG&E and Edison creditors, be forced to repay many billions of dollars because, as he put it, they had gouged the state. Ultimately, Davis' campaign failed, although his strident advocacy did, apparently, arrest his decline in public opinion polls. Meanwhile, the Edison deal languished. With the Legislature now poised to leave Sacramento on a month-long summer recess and a self-imposed deadline for enacting the Edison plan approaching, the Capitol is newly aflutter with efforts. ??"Complex" doesn't even begin to describe the situation. There are at least three alternative plans kicking around, none of which can be passed as written. Davis may be willing to accept almost anything that would save him from the embarrassment of another utility bankruptcy on his watch, but currently backs a scheme ginned up by Assembly Democratic leaders. Edison, however, has split with Davis and now favors an alternative offered by Republicans and some moderate Democrats - one that consumer advocates denounced as a corporate bailout. Meanwhile, liberal senators are pushing another version that Edison likes even less, but its critics among consumer activists like more. ??With both lawmakers and outside interest groups so widely scattered over what, if anything, should be done to rescue Edison, a consensus developed late Thursday to keep the vehicles alive with preliminary floor votes, but continue private negotiations through the month-long vacation recess. ??The many-sided stalemate stems from both the rivals plans' provisions - farmers, for example, fear environmentalists' gaining authority through the state over Edison-owned watershed in the Sierra - and the convoluted dynamics of the Capitol. ??Legislative leadership is very weak in the era of term limits, especially in the Assembly, and lawmakers are leery about voting for any complex utility measure, particularly one that might raise rates. Some call it "1890 disease" for the number of the 1996 deregulation bill that backfired so badly. ??Then, too, some liberals and consumer activists appear to want all of the measures to fail, forcing Edison into bankruptcy court. Then, they believe, the newly created but still inactive state power authority could step in, using its $5 billion in untapped bonding authority, and pick up assets of the utilities on the cheap, thus creating a massive state utility system. ??Wheels within wheels, and none of them meshing. ??(Contact Dan Walters of the Sacramento Bee in California at http://www.sacbee.com.) LOAD-DATE: July 20, 2001
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