|
|
Enron Mail |
Please see the following articles: Sac Bee, Tues, 5/10: No deal in energy refund talks Sac Bee, Tues, 5/10: Third power plant opens: But the Los Medanos=20 facility isn't pouring out electricity yet Sac Bee, Tues, 5/10: State reveals high-priced power deals Sac Bee, Tues, 5/10: Government finds ways to conserve: The Santa Rita=20 Jail goes solar as agencies get creative to cut costs SD Union, Tues, 5/10: Energy talks reach no settlement; state threatens sui= t SD Union, Tues, 5/10: Refunds in jeopardy as talks fail SD Union, Tues, 5/10: State's massive outlays detailed SD Union, Tues, 5/10: State releases early spot market energy purchases LA Times, Mon, 5/9: FERC Judge Says State Owed No More Than $1 Billion LA Times, Tues, 5/10: Electricity Cost Data Spread the Blame LA Times, Tues, 5/10: Duke Energy Asked to Allow Release of Data LA Times, Mon, 5/9: Concern Over Price of Long-Term Power Pacts Grows SF Chron, Tues, 5/10: State's refund demand rejected=20 Judge ends rebate talks, rebukes $9 billion claim=20 SF Chron, Tues, 5/10: Davis opens another new power plant=20 Pittsburg facility will generate 555 megawatts SF Chron, Tues, 5/10: California rejects B.C. Hydro $125 million settlement SF Chron, Tues, 5/10: Davis' criticism of Texas misdirected, report finds SF Chron, Tues, 5/10: Developments in California's energy crisis SF Chron, Tues, 5/10: Energy talks reach no settlement; state threatens sui= t SF Chron, Tues, 5/10: Toxic fumes not linked to blackouts=20 Backup power OK in facilities, report says Mercury News, Tues, 5/10: Power suppliers, state fail to agree on refund to= tal Mercury News, Tues, 5/10: Power purchase bills exceed $7.5 billion Biggest suppliers are not from Texas OC Register, Tues, 5/10: Refund outlook dims OC Register, Tues, 5/10: State reveals details of power purchases OC Register, Tues, 5/10: Ghost of Bob Citron roaming halls of capital Gray Davis is following footsteps of former O.C. treasurer into fiscal chao= s (Commentary) Individual.com (PRnewswire), Tues, 5/10: Calpine's Los Medanos Energy Cent= er Adds Needed Generation to California Second New Major Base Load Generato= r for California =09 NY Times, Tues, 5/10: California and Generators Still Split After 2-Week Ta= lks Wash. Post, Tues, 5/10: Energy Refund Talks Fail In Calif.; Federal Agency'= s Judge To Propose Settlement WSJ, Tues, 5/10: California and Energy Companies Miss Deadline ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ----------------------- No deal in energy refund talks=20 By David Whitney Bee Washington Bureau (Published July 10, 2001)=20 WASHINGTON -- Negotiations to settle a tangle of issues arising out of Cali= fornia's electricity debacle sputtered to an end Monday with the sides ligh= t-years apart on refunds for overpriced wholesale power sales.=20 The impasse raises the specter of years of litigation, with a regulatory ju= dge proposing a formula that could limit refunds to about $1 billion while = California is seeking at least $8.9 billion and perhaps much more.=20 Federal Energy Regulatory Commission administrative judge Curtis Wagner sai= d that within a week he'll urge the five FERC commissioners to begin fact-f= inding hearings on how much is truly owed, following guidelines he outlined= sketchily Monday.=20 Among them would be limiting the time when refunds are allowed -- something= that could reduce state claims by about one-third -- and changing the way = power plant costs are calculated to a formula more favored by generators.= =20 Gov. Gray Davis said he was heartened by the judge's belief that California= is due some amount of refund money, rejecting the generators' arguments fo= r no refunds.=20 With the 15-day negotiation session nearly moribund, generators and power t= raders had offered up $716 million in proposed refunds in the final days. B= ut Wagner indicated that that would have to be offset by money the state st= ill owes power companies, meaning no cash would actually change hands.=20 The judge held out the possibility that at least two parties, including San= Jose-based Calpine Corp., could reach separate agreements with the state.= =20 "From what I know, it looks like we can reach an agreement," Calpine spokes= man Bill Highlander confirmed Monday. But he said he could not disclose any= details under Wagner's gag order on participants in the negotiations.=20 Enron Corp., one of the nation's highest-profile power traders, said Califo= rnia officials killed the talks by never budging from their claims that the= state's consumers deserved at least $8.9 billion in refunds for overcharge= s.=20 "These talks never had a chance," said Enron spokesman Mark Palmer. "Their = political skins are worth more than $716 million that the taxpayers of Cali= fornia could have used. It was about creating and maintaining a tool for a = witch hunt."=20 Of the $716 million compromise offer, $510 million was put on the table by = what Wagner called the "Big Five" generators -- Reliant, Duke, Mirant, Will= iams and Dynegy -- some of whom are under state investigation. Another $125= million was offered by BC Hydro, British Colombia's government utility, wh= ich is not under FERC jurisdiction, and $16.5 million was offered by six Ca= lifornia municipal utilities.=20 The Sacramento Municipal Utility District, the state's second-largest munic= ipal utility, also declined to comment on the talks or any settlement amoun= t it may have offered, but said it would outline its position in writing Th= ursday, the judge's deadline for comments on his proposal.=20 Consumer advocates and some industry officials said the judge's brief publi= c remarks make it difficult to predict exactly what the impacts could be on= the state's troubled electric scene.=20 "If the judge is saying that the refund is topped at a billion that's outra= geous," said Nettie Hoge, head of The Utility Reform Network. "If they're g= oing to start doing some fact finding, hallelujah."=20 Hoge said the talks had been unrealistic from the start, because there was = no effort by FERC to determine how high the overcharges had actually been a= nd then work toward a compromise from there.=20 The state used a formula calculated by its nonprofit grid operator, the Ind= ependent System Operator, which was attacked by marketers as wildly high ev= en while the state called it conservatively low.=20 Joel Newton, representing all five of the big generators, said Monday that = the ISO has consistently based its demand on "sketchy and incomplete" data.= =20 The face-off between Davis and power merchants began last fall, as wholesal= e electricity costs were soaring and California utilities warned that they = could be driven into bankruptcy.=20 The governor said generators and traders took advantage of the state's powe= r shortage to manipulate markets and gouge consumers. Generators said they = followed all laws and were only deriving fair profits in a scarcity situati= on.=20 FERC, which entered the picture because by law it has to ensure that electr= icity rates are "just and reasonable," has made repeated, unsuccessful effo= rts to craft a solution that could appease both sides.=20 State Assembly Speaker Robert Hertzberg, D-Sherman Oaks, said Monday that t= he failure of the settlement talks to agree on a refund figure "comes as no= surprise."=20 Negotiators representing generators "refused to even acknowledge the inesca= pable fact that they have profited enormously by exploiting a dysfunctional= market -- at California's expense," he said.=20 Davis, who had accused the generators of failing to negotiate in good faith= with state representatives, said that although FERC commissioners have bee= n slow to respond to his requests for refunds and for price caps on wholesa= le electricity, they "now have the opportunity to redeem themselves."=20 He suggested the commissioners can opt to award California more than is rec= ommended by the judge.=20 Wagner, after mediating talks that continued throughout the weekend, seemed= resigned to the fact that trying to bring more than 50 government, utility= and power generating entities together proved to be an exercise in futilit= y.=20 Michael Kahn, head of the California delegation and consultant to the Calif= ornia ISO, nonetheless came away thinking the state had fared pretty well.= =20 "We came here wanting $8.9 billion," Kahn said. "In all candor, we didn't r= eceive any meaningful settlement offers and so the negotiations were not as= helpful as we had hoped they would be. But our positions were vindicated" = because refunds were offered.=20 Meanwhile, Pacific Gas and Electric Co. and Southern California Edison soun= ded the call for more talks.=20 "We're willing to talk to anyone, anytime about a settlement," said Steve P= ickett, general counsel of Southern California Edison. PG&E said in a prepa= red statement that the sessions "provide a solid basis for further negotiat= ions."=20 How much money the state might eventually receive remains the big question = mark. Wagner said settlement offers of $716 million suggest that eventual r= efunds will amount to "hundreds of millions of dollars, maybe a billion." B= ut he also stressed that he would recommend no specific figure to FERC comm= issioners and does not know how big refunds might eventually be.=20 Other recommendations Wagner said he would make to the commission were a mi= xed bag for the state.=20 The judge said he would recommend refunds no further back than Oct. 2, 2000= , an action that Kahn said would immediately slice $3 billion off the state= 's refund analysis that stretched back to May 2000.=20 But Kahn said that was no defeat for the state, which would turn to the cou= rts to recover that and any other sums excluded from a final refund order.= =20 "We still have a viable litigation claim for the remainder," Kahn said.=20 Brent Bailey, vice president and general counsel of Duke Energy of North Am= erica, said he felt the formula laid out by Wagner would generate a refund = order in the range of $1 billion to $1.5 billion.=20 "It's a reasonable amount in the context of these settlement talks," Bailey= said.=20 The Bee's David Whitney can be reached at (202) 383-0004 or dwhitney@mcclat= chydc.com .=20 Staff writers Emily Bazar and Dale Kasler contributed to this report. Third power plant opens: But the Los Medanos facility isn't pouring out ele= ctricity yet.=20 By Carrie Peyton Bee Staff Writer (Published July 10, 2001)=20 The flood of new electricity being welcomed by Gov. Gray Davis was only a t= rickle at the latest power plant that the governor opened on Monday, accord= ing to sources close to California's energy crisis.=20 Heralded by Davis as part of a "powerful one-two-three punch" that will bri= ng California closer to energy independence, the Los Medanos Energy Center = in Pittsburg spit out no more than 20 megawatts on its opening day, they sa= id.=20 That is less than 5 percent of the plant's 555-megawatt operating capacity.= =20 Los Medanos could generate a couple of hundred megawatts later this week bu= t is not expected to reach its full output for two to three weeks, accordin= g to knowledgable sources.=20 Representatives for Calpine and the governor's office, when pressed for det= ails, acknowledged that the plant was not running at full tilt but said the= y did not know how much electricity was actually produced Monday.=20 Calpine, which will bill someone for whatever electricity it sells from Los= Medanos, is keeping track of the production but the figure wasn't immediat= ely available for the media, spokeswoman Katherine Potter said.=20 "Even if it was two megawatts, that's two more megawatts that we didn't hav= e yesterday," said Davis spokesman Steve Maviglio.=20 He said the opening was "largely ceremonial," timed for the convenience of = the governor and Calpine's top executive.=20 But consumer advocate Harvey Rosenfield called the media event "a deception= ." It was the third highly publicized power plant launch the governor has a= ttended in the past two weeks.=20 "It's the governor trying to convince people he's hard at work solving the = problem when it's all for show," Rosenfield said. "He's governing by sound = bite. He's certainly getting his money's worth from the consultants he hire= d."=20 Davis political adviser Garry South said last week that the governor's new = radio ad campaign will highlight the efforts to produce more power in Calif= ornia.=20 "Generation comes up in our polls as being the No. 1 thing people want us t= o do -- build more power plants," South said then. "People want the sense t= hat progress is being made -- that this is not spiraling out of control."= =20 The other two plants that Davis kicked off -- Sunrise in Kern County and Su= tter near Yuba City -- have since been running at maximum capacity.=20 Calpine anticipates pumping the full 550 megawatts out of Los Medanos withi= n a week to 10 days, company officials said.=20 "In the first month of these new plants, there are always stops and starts,= " said Calpine spokesman Bill Highlander. "Sometimes we shut down altogethe= r."=20 Including the three just-opened facilities, new or expanded power plants ar= e expected to add 1,500 megawatts to the state's struggling electric grid b= y the end of July, and 870 megawatts of that is already in place, according= to the state Independent System Operator.=20 Another 1,000 megawatts is anticipated for the end of August and 1,100 more= for the end of September, under a rough timetable that is likely to see so= me plants zip ahead of schedule and others fall behind.=20 The Bee's Carrie Peyton can be reached at (916) 321-1086 or cpeyton@sacbee.= com . State reveals high-priced power deals=20 By Dale Kasler and Chris Bowman Bee Staff Writers (Published July 10, 2001)=20 The state Monday released details of its adventures in buying electricity o= n the spot market, revealing a chaotic world in which prices fluctuate wild= ly within minutes.=20 The Department of Water Resources, which has been criticized for keeping it= s power-purchasing practices a secret, released 1,770 pages of invoices and= trade confirmations that provided the most detailed look yet of its purcha= ses since it jumped into the energy-buying business Jan. 17. The informatio= n was released a week after state Controller Kathleen Connell put out detai= ls of the state's long-term power contracts over the objections of Gov. Gra= y Davis, her political nemesis.=20 The state has committed about $8.1 billion to buying power on behalf of Cal= ifornia's crippled utilities, straining the budget surplus and raising ques= tions from lawmakers and others about Davis' policies for resolving the sta= te's energy crisis. In turn, state officials have accused many suppliers of= gouging California to the tune of several billion dollars.=20 When it came to the spot market, the water department was at the mercy of a= business run amok. The state paid upward of $300 a megawatt-hour for days = in January and February -- months when electricity normally should be a lot= cheaper. Water officials said prices have dropped to the $100 range largel= y because they've signed a slew of long-term contracts, reducing their depe= ndence on spot sales.=20 "Our exposure earlier this year to the spot market was at the maximum," sai= d Oscar Hidalgo, spokesman for the water department.=20 The information released Monday covered the first three months of the year = and didn't include the highest price the water department has paid for elec= tricity: $1,900 a megawatt-hour in May to Reliant Energy Inc., a Texas gene= rator that owns several plants in the state. Duke Energy Corp. of North Car= olina charged even more for power in January, $3,880 a megawatt hour, but t= hat sale was made to the Independent System Operator, which runs the state'= s transmission grid.=20 The documents show that while the state's stricken utilities no longer buy = power for themselves, their sister companies have sold expensive power.=20 Through May 31, the state paid a trading arm of Sempra Energy, the parent o= f San Diego Gas & Electric, some $429 million for power. It paid PG&E Energ= y Trading, an unregulated sister company of Pacific Gas and Electric Co., a= bout $23.7 million.=20 Among others, the Los Angeles Department of Water and Power was paid $331 m= illion through May 31; Canadian utility BC Hydro was paid $1.05 billion; At= lanta's Mirant Corp. $1.24 billion; the federal government's Bonne=07ville = Power Administration $167 million; and the Sacramento Municipal Utility Dis= trict $80.7 million.=20 Generally, the more desperate the state was for power, the higher the price= s. For instance, Oklahoma-based generator Williams Cos. commanded $565 a me= gawatt-hour March 20, when blackouts struck more than 1 million Californian= s.=20 Location also was critical. On March 8 the state paid the PG&E trading unit= $250 but only $180 to Arizona-based Pinnacle West Capital Corp. The differ= ence was that PG&E's power was delivered to energy-starved Northern Califor= nia, while Pinnacle's was sent to Southern California where energy wasn't s= o scarce.=20 Split-second timing was also crucial. At 9:09 a.m. Feb. 14, the state paid = $400 to Mirant for power to be delivered the next day. By 10 a.m. it was pa= ying Mieco Inc., a Long Beach trading firm, $475 for the same product.=20 "That's the spot market -- it's the most volatile market in the world, and = it changes on a second-by-second basis," said Enron Corp. spokesman Mark Pa= lmer.=20 For all the criticism leveled at Duke, Reliant and other big corporations, = government-owned entities were among the most aggressive at charging high p= rices.=20 BC Hydro, the electric utility owned by the Canadian province of British Co= lumbia, submitted bills for up to $1,000 a megawatt-hour. The city of Glend= ale charged $375 a megawatt-hour for power in January, while SMUD charged $= 309 a megawatt-hour in March. The city of Eugene, Ore., averaged $450 a meg= awatt-hour in February.=20 "We play by the rules of the electricity trade marketplace," said BC Hydro = spokesman Wayne Cousins. "Our traders worked very hard to find additional s= ources of electricity to keep the lights on in California. Had we not come = through and stepped forward with these supplies, the consequences to Califo= rnia customers would have been severe."=20 The state also said it has spent $14.4 million on administrative costs in b= uying power.=20 The Bee's Dale Kasler can be reached at (916) 321-1066 or dkasler@sacbee.co= m . Government finds ways to conserve: The Santa Rita Jail goes solar as agenci= es get creative to cut costs. By Cheryl Miller Bee Correspondent (Published July 10, 2001)=20 To Matt Muniz, the solar panels sprouting on the rooftop of the Santa Rita = Jail in Dublin aren't just energy-makers; they're money in the bank.=20 When all 4,000 panels are completely installed this month, the 500-kilowatt= photovoltaic system -- the largest rooftop project ever constructed in the= United States -- will cut the jail's demand on the electric grid by up to = 20 percent, according to Muniz, Alameda County's energy program manager.=20 That sun power, combined with conservation projects already completed at th= e jail, will slash about $300,000 a year from the facility's energy bill. M= uniz is already scouting other county rooftops for solar potential.=20 "With the cost of electricity going up, you can start looking at it as a bu= siness decision, just investing your money," said Muniz. "There's virtually= no maintenance on this equipment. It just sits on your roof and converts r= ight into electricity that you're using as soon as you generate it. I think= (solar) is the wave of the future, even though it's been around 30 or 40 y= ears."=20 The Santa Rita Jail project is among the largest, and perhaps most conspicu= ous, examples of steps government agencies are taking to cut electricity us= e in response to skyrocketing power bills and Gov. Gray Davis' call for pub= lic entities to conserve.=20 Among the examples:=20 San Francisco leaders are pondering a bond measure to finance solar-powered= rooftop projects around the city.=20 The Tulare County town of Lindsay will open City Hall two hours earlier -- = at 6 a.m.-- and close at 4:30 p.m. Monday through Thursday this summer so o= ffices can stay dark all day Friday and during peak-use afternoon hours.=20 Sacramento County has instituted a casual dress policy so employees can bet= ter withstand office temperatures that climb as high as 78 degrees. Workers= have also set sprinklers to run at night so that electric water pumps oper= ate during low demand.=20 "When you start to see the bills going up and you start to hear concerns fr= om some citizens, that obviously raises the threshold of wanting to help ou= t," said Jolena Voorhis, an energy analyst at the California State Associat= ion of Counties. "Certainly (counties) stepped up to the plate when they we= re asked to increase conservation efforts. They've done about as much as hu= manly possible."=20 Kings County leaders thought they made a great deal in 1992 when they signe= d up for Southern California Edison's interruptible load program, which pro= mises customers lower rates in exchange for agreeing to shut down electrica= l services in times of shortage.=20 Then California's power crisis hit full-force this year. Since January, Edi= son has called on the Central Valley county to cut electricity at its Hanfo= rd government center 16 times -- for up to six hours each cycle.=20 At times that meant no lights to greet the public, no computers to process = food stamp requests and during the Valley's foggy winter days, no heat to w= arm many of the 1,200 employees.=20 "We had one week in January when we were virtually shut down," said Chief A= dministrative Officer Larry Spikes. "We just decided we couldn't function t= hat way."=20 So Kings County supervisors bought a $550,000 diesel-powered generator to m= atch those already at the jail and juvenile center. They also decided to op= en and close administrative offices one hour earlier this summer so buildin= gs can power down before high demand hits the grid around 4 p.m.=20 The new hours, dimmed hallways and moments of darkness that occur when the = generators kick on have become a routine part of doing government business = these days, Spikes said.=20 So far, most counties have been able to absorb higher energy costs without = cutting into programs because of relatively healthy budgets in recent years= , Voorhis said.=20 Public agencies' power troubles have proved a boon to some businesses.=20 Revenues at PowerLight, the Berkeley company that installed the Santa Rita = Jail photovoltaic system, have tripled since last year.=20 "The last six months have been particularly intense," said Janice Lin, dire= ctor of business development for PowerLight. "In some ways the energy crisi= s in California has been a call to action."=20 The Sacramento Municipal Utility District, which already boasts the largest= photovoltaic program in the country, has a 2,000-customer waiting list for= solar projects and plans to bring sun power to the state Capitol, said Don= Osborn, SMUD's solar program manager.=20 Back in Dublin, the 3,600 inmates at the Santa Rita Jail still receive thre= e meals, air conditioning and hot showers -- powered now, in part, by the p= lentiful sun in this relatively fog-free part of the East Bay.=20 The $4 million project, financed entirely with state and utility subsidies,= should generate enough savings to pay for itself within the decade, Muniz = said.=20 "It's a good investment for the money we're putting up front," he said. Energy talks reach no settlement; state threatens suit By Mark Sh= erman ASSOCIATED PRESS July 10, 2001 WASHINGTON - With talks between the = state and power generators stalled, California may go to court to help win = the $8.9 billion state officials believe it was overcharged for electricity= . "I think we have demonstrated very clearly both to the FERC and to the j= udge that the state is owed $8.9 billion and will settle for nothing less,"= said Roger Salazar, a spokesman for Gov. Gray Davis. With negotiations at= an impasse, the administrative law judge for the Federal Energy Regulatory= Commission said California is probably owed no more than $1 billion in ref= unds. "The numbers were too far apart," said Curtis Wagner, the FERC chi= ef administrative law judge. California, Wagner said, may receive nothing = at all, because generators may be owed more than they have to return for an= y overcharges. He placed the refunds owed the state at between $716 millio= n and $1 billion. Power providers had offered $716 million as part of an ov= erall settlement, while California state officials sought $8.9 billion, Wag= ner said. He said California officials had not made the case for $8.9 bill= ion in refunds. Salazar, however, said the state would go to court and may= ask for $20 billion. Separately, Wagner split off claims of overcharges f= rom the Pacific Northwest, saying he has not had time to consider those all= egations under the short timetable ordered by FERC last month. Wagner serv= ed as a mediator during the 15 days of negotiations and will recommend a se= ttlement to FERC by next Monday. The commission ordered the talks last mont= h in an effort to resolve differences between producers and the state over = the breakdown of California's deregulated electricity market. Consumer adv= ocates assailed the judge's recommendation and urged the state to continue = its attempt to get refunds from what they say are profiteering power compan= ies. "It's like catching a bank robber, but instead of making him give bac= k all of it, you only make him give back 5 percent of what he stole," said = Douglas Heller, spokesman for the Santa Monica-based Foundation for Taxpaye= r and Consumer Rights. Power generators, however, were generally pleased w= ith Wagner's comments. Brent Bailey, general counsel for Duke Energy, said= even if the formula Wagner recommends produces $1.5 billion in refunds, "t= hat's a reasonable amount in the context of these settlement talks." Calif= ornia officials, negotiating on behalf of utilities, the Public Utilities C= ommission and state power buyers, accused the producers of manipulating sup= ply to unfairly drive up prices. The producers have acknowledged prices ar= e high, but blame jumps in the price of natural gas, which fuels many power= plants, and the workings of the free market. The bill for wholesale power= in California soared to $27 billion last year from $7 billion the year bef= ore. Davis has estimated the state could spend as much as $50 billion this = year. The producers reiterated Monday that California's numbers are grossl= y inflated. Attorneys for the five major generators - Duke Energy, Dynegy, = Mirant, Reliant Energy and the Williams Cos. - said in a statement that the= y have made a "very substantial global settlement offer." Reliant would ag= ree to no more than $50 million in refunds as part of an overall settlement= that also would have to include protection from additional legal claims, s= aid John H. Stout, a company senior vice president. But Stout also said, "= Reliant's fundamental position has been and remains that no refunds are jus= tified." Refunds in jeopardy as talks fail Judge sees p= ossibility of offsets equal to the billions sought by state By Toby Eckert = COPLEY NEWS SERVICE July 10, 2001 WASHINGTON -- Settlement talks between= California and power providers accused of electricity price gouging collap= sed yesterday, and the judge who will now hand the case over to federal reg= ulators set a course far from favorable to the state's demand for $8.9 bill= ion in refunds. "There are refunds due that total hundreds of millions of = dollars and maybe a billion dollars," Curtis L. Wagner Jr., chief administr= ative law judge for the Federal Energy Regulatory Commission, said in previ= ewing the recommendations he will make to the commission. But Wagner, who = mediated the talks, also suggested that power sellers are still owed sums f= or electricity "that probably are higher than any overcharges" for which th= ey may have to pay refunds. That opened the possibility that California co= uld see no cash refunds, only a reduction in the billions of dollars the po= wer generators and marketers claim they are owed by state entities and util= ities. Wagner said he would recommend that FERC hold a "fast-track hearing= " to try to untangle the complex financial claims and counterclaims arising= from California's power crisis. Wagner also outlined a method that he sai= d FERC should use for calculating refunds. While his proposed formula incl= udes part of one method the state used, it contains several elements for ca= lculating electricity costs that were favored by power sellers, who maintai= n that California's numbers are wildly exaggerated. "I would suspect that = would result in a number much below $8.9 billion," said Joe Ronan, vice pre= sident of Calpine, a San Jose-based electricity generator. "I think (Wagner= 's method) reflects more accurately what actually happened" in the state's = dysfunctional power market. But Michael Kahn, the state's lead negotiator,= said Wagner "vindicated" California's core arguments. "The hundreds of pe= ople who came here on the other side had argued to the mediator that there = should not be any refunds, and that position was loudly rejected," said Kah= n, chairman of the organization that manages most of California's power gri= d. "We think the numbers, even using the judge's formula, are going to be = in the multiple billions. Whatever amount of money . . . is awarded to us, = we will have viable claims in state court and other jurisdictions for the r= emainder. So what we have here is a situation where California will get its= $8.9 billion." Power sellers acknowledged that the threat of litigation r= emains worrisome to them. They sought an end to investigations of their con= duct, and immunity from legal action as part of their bargaining position. = During two weeks of negotiations ordered by FERC, the two sides came nowhe= re near bridging their differences. Wagner said a number of power sellers h= ad put forward offers that totaled $716.1 million. "That's a long way from= splitting the difference," he said. "In 15 days, you can't work miracles."= Yesterday -- the deadline for completing the talks -- the ill will betwee= n the two sides broke into the open as Wagner allowed reporters into the pr= eviously closed hearings. Each side essentially accused the other of barga= ining in bad faith and failing to put forward realistic proposals. John H.= Stout, a senior vice president at Reliant Energy Wholesale Group, said the= state used "biased calculations" to arrive at its $8.9 billion refund dema= nd. He also said that Reliant offered to knock $50 million off the $300 mil= lion it claims it is still owed for power sold into the state. Kahn shot b= ack that Reliant made the offer confidentially to Wagner and never approach= ed the state. Figures scrutinized "This is the first time we've heard any = of this information. And to give the impression that somehow there's been c= ooperation or forthcomingness, I think is misleading," Kahn said. The stat= e's refund calculations were scrutinized repeatedly during the talks. The = $8.9 billion figure emerged from a study by the California power grid opera= tor of charges for electricity between May 2000 and May 2001, a period when= wholesale power prices soared. Kahn said the figure was essentially dupli= cated when the state went back and calculated what power costs would have b= een if a pricing method instituted by FERC last month had been in effect fo= r the entire yearlong period. FERC ordered the pricing method in a bid to = tame wholesale prices in the West. In a partial win for the state, Wagner = said he would recommend that FERC use the order retroactively as a basis fo= r calculating refunds, an approach resisted by the power sellers. But he s= aid that FERC should only scrutinize charges going back to October 2000, an= d should make several key changes in how power-generating costs are calcula= ted. For instance, he said, FERC should determine the actual amount of gas= heat it takes to generate a megawatt of electricity and use spot market pr= ices in Northern and Southern California to determine the cost of gas, rath= er than a statewide average cost, computed monthly. Fewer overcharges? Tho= se and other parts of the complex formula Wagner will recommend could incre= ase the benchmark cost of producing power and drive down the amount of over= charges. Kahn said that applying FERC's pricing method only back to Octobe= r would put about $3 billion of the state's refund claim off-limits. Brent= Bailey, vice president and general counsel for Duke Energy North America, = said, "We think (Wagner's) modifications are certainly a vast improvement o= ver FERC's June 19 order and also certainly over (the state's) model." Ame= rica. In Sacramento, Gov. Gray Davis issued a statement characterizing the= electricity suppliers as pirates who refused to negotiate in good faith. = "While in the past the FERC has shown little, if any, interest in consumers= , they now have the opportunity to redeem themselves by returning the $8.9 = billion California has demonstrated it is owed," Davis said. Despite the h= arsh rhetoric, both sides indicated that they would continue trying to reac= h one-on-one settlements. Ronan of Calpine said the generator was close to= making a deal with the state. Bailey said that while Duke would continue t= o push for a "global settlement" between all the parties, "We've had seriou= s settlement talks with the state over the last few days and hope to contin= ue." State's massive outlays detailed Energy bill exce= eded $100 million on 3 days By Jennifer Coleman ASSOCIATED PRESS July 10,= 2001 SACRAMENTO -- On three days in May, California's daily power spendin= g topped $100 million, according to a report released yesterday by state po= wer traders. The California Department of Water Resources report, which ad= dressed spot market electricity purchases since January, was released along= with 1,770 pages of documents that specifically detailed the first three m= onths of last-minute power purchases. Such power buys on the spot market t= ypically get the most expensive electricity available. The report details = the department's electricity spending since Jan. 17, when the state took ov= er electricity purchases for Pacific Gas and Electric Co., San Diego Gas & = Electric Co., and Southern California Edison. The utilities had amassed bi= llions in debts and were no longer creditworthy enough to purchase power. S= ince then, the state has spent nearly $8 billion to keep the lights on. Th= e state's daily spending peaked May 10 at $102.4 million. The second-highes= t daily total was May 23, when the state spent $101.8 million. The day befo= re, the state spent $100 million. But since May, spot market prices have d= ropped, due in part to moderate weather, lower natural gas prices, increase= d conservation which lowered demand and because of increased scrutiny by la= wmakers and investigators into possible price manipulation. Gov. Gray Davis= has said long-term contracts also drove the price down. "It does look lik= e some of the spot market prices have gone down, but it looks like it's pri= marily due to natural gas prices," said Jamie Fisfis, spokesman for Assembl= y Republicans. The slight reduction in spot market prices "underscores que= stions about the strategy of locking us into long-term contracts, if natura= l gas prices continue to drop," Fisfis said. Most of the long-term contrac= ts run for 10 years, with one lasting for 20 years. "It's unfortunate that= it looks like we'll never get out from under these contracts," Fisfis said= . Davis has already released details of the state's long-term power contra= cts after losing a court battle with Republican legislators and several new= s organizations, including The Associated Press and The Copley Press, which= publishes The San Diego Union-Tribune. Davis released copies of those con= tracts, but wanted to delay the release of the spot market buys and short-t= erm contracts. Releasing those details too soon after the purchases would r= eveal the state's buying strategy and could cause generators to raise their= already sky-high prices, Davis said. The number of spot market buys will = lessen, the Davis administration says, as more long-term contracts are sign= ed, reducing the state's exposure to the high-priced purchases. The govern= or's office will release future short-term contracts and spot market buys w= ill be released on a quarterly basis, with a 90-day lag time. Second quarte= r information will be released in October and third quarter documents will = be available in January. Davis maintains the delay is needed to protect it= s ability to negotiate further spot-market power buys. According to the wa= ter department, Canadian Powerex, the marketing arm of BC Hydro, has been p= aid $1.05 billion for spot market purchases as of May 31. But Atlanta-base= d Mirant Corp. topped that list, getting $1.24 billion as of the end of May= . The newly released short-term contracts also show what the state had to = pay when it needed power the most. On March 19 and 20, when rolling blacko= uts hit California again, the state was forced into paying above-average pr= ices in its largest short-term contracts. For example, Mirant sold the sta= te 650 megawatts an hour at off-peak usage times on March 20 for $345 a meg= awatt hour, more than $70 above the average price of $272.96. The day befo= re, Mirant charged $343 a megawatt hour at off-peak in northern California = when the average cost was $254.52. Also on March 19, Mirant charged the st= ate about $96 above the average price for power in Northern California on a= sale of 6,400 megawatt hours during off-peak times. Other top-selling gen= erators, as of May 31: Sempra Cos., $429 million. Los Angeles Departmen= t of Water and Power, $331 million. Dynegy, $296 million. TransAlta Ene= rgy, $202 million. Bonneville Power, $168 million. Duke Energy, $164 mi= llion. State releases early spot market energy purchases By = Jennifer Coleman ASSOCIATED PRESS July 10, 2001 SACRAMENTO - On three day= s in May, California's daily power allowance topped $100 million, according= to a report released Monday by state power traders. However, the source o= f those high prices was from not solely from Texas, home to many of the pow= er marketers and wholesalers Gov. Gray Davis has blamed for much of Califor= nia's power woes. Public and private power companies such as Canada's B.C.= Hydro, the Los Angeles Department of Water and Power and Sacramento's publ= ic utility also were high on the list. The California Department of Water = Resources released the report, along with 1,770 pages of documents that als= o detailed the last-minute power purchases the state made on the spot marke= t in the first three months of the year. Last-minute power buys on the spo= t market typically get the most expensive electricity available. The repor= t details the department's electricity spending since Jan. 17, when the sta= te took over electricity purchases for Pacific Gas & Electric Co., San Dieg= o Gas & Electric Co., and Southern California Edison. The utilities had am= assed billions in debts and were no longer creditworthy enough to purchase = power. Since then, the state has spent nearly $8 billion to keep the lights= on. The state's daily spending peaked May 10 at $102.4 million. The secon= d-highest daily total was May 23, when the state spent $101.8 million. The = day before, the state spent $100 million. But since May, spot market price= s have dropped, due in part to moderate weather, lower natural gas prices, = increased conservation which lowered demand and because of increased scruti= ny by lawmakers and investigators into possible price manipulation. Gov. Gr= ay Davis has said long-term contracts also drove the price down. "It does = look like some of the spot market prices have gone down, but it looks like = it's primarily due to natural gas prices," said Jamie Fisfis, spokesman for= Assembly Republicans. The slight reduction in spot market prices "undersc= ores questions about the strategy of locking us into long-term contracts, i= f natural gas prices continue to drop," Fisfis said. Most of the long-term= contracts run for 10 years, with one lasting for 20 years. "It's unfortun= ate that it looks like we'll never get out from under these contracts," Fis= fis said. Davis has already released details of the state's long-term powe= r contracts after losing a court battle with Republican legislators and sev= eral news organizations, including The Associated Press, who said keeping t= he contracts veiled violated the state's open records law. Davis released = copies of those contracts, but wanted to delay the release of the spot mark= et buys and short-term contracts. Releasing those details too soon after th= e purchases would reveal the state's buying strategy and could cause genera= tors to raise their already sky-high prices, Davis said. The number of spo= t market buys will lessen, the Davis administration says, as more long-term= contracts are signed, reducing the state's exposure to the high-priced pur= chases. The governor's office will release future short-term contracts and= spot market buys will be released on a quarterly basis, with a 90-day lag = time. Second quarter information will be released in October and third quar= ter documents will be available in January. Davis maintains DWR needs the = delay to protect its ability to negotiate further spot-market power buys. = According to the DWR, Canadian Powerex, the marketing arm of BC Hydro, has = been paid $1.05 billion for spot market purchases as of May 31. But Atlant= a-based Mirant Corp. topped that list, getting $1.24 billion as of the end = of May. The newly released short-term contracts also show what the state h= ad to pay when it needed power the most. On March 19 and 20, when rolling = blackouts hit California again, the state was forced into paying above-aver= age prices in its largest short-term contracts. For example, Mirant sold t= he state 650 megawatts an hour at off-peak usage times on March 20 for $345= a megawatt hour, more than $70 above the average price of $272.96. The day= before, Mirant charged $343 a megawatt hour at off-peak in northern Califo= rnia when the average cost was $254.52. Also on March 19, Mirant charged t= he state about $96 above the average price for power in Northern California= on a sale of 6,400 megawatt hours during off-peak times. Other top sellin= g generators, as of May 31: - Sempra Companies, $429 million. - Los Angel= es Department of Water and Power, $331 million. - Dynegy, $296 million. -= TransAlta Energy, $202 million. - Bonneville Power, $168 million. - Duke= Energy, $164 million. FERC Judge Says State Owed No More Than $1= Billion From Associated Press July 9 2001 WASHINGTON -- California is ow= ed no more than "a billion dollars" from power wholesalers, a federal regul= atory judge said today at the end of 15 days of settlement talks in the sta= te's electricity crisis. Curtis Wagner, the Federal Energy Regulatory Comm= ission's chief administrative law judge, said that at the same time the pow= er suppliers probably are owed more than that. The net effect of his preli= minary recommendation is that California probably will receive no refunds f= rom wholesalers. Wagner said power generators had offered $761 million in = refunds. The state has asked for $8.9 billion since May 2000. Wagner said h= e will not recommend refunds for power sales that occurred before Oct. 2. = It was not immediately clear what impact the judge's preliminary recommenda= tion would have on efforts to settle the dispute. Both sides said before t= he judge's announcement that they expected a protracted legal battle in the= event the talks did not produce a settlement. Michael Kahn, Gov. Gray Dav= is's representative in the talks, has said the state would seek more than t= wice the claimed overcharges if the dispute moved from mediated talks to a = courtroom. The producers reiterated today that California's numbers are gr= ossly inflated. Attorneys for the five major generators-- Duke Energy, Dyne= gy, Mirant, Reliant Energy and the Williams Cos.-- said in a statement that= they have made a "very substantial global settlement offer." John H. Stou= t, a senior vice president for Reliant Energy, said his company would agree= to no more than $50 million in refunds, as part of an overall settlement t= hat also would have to include protection from additional legal claims. Bu= t Stout also said, "Reliant's fundamental position has been and remains tha= t no refunds are justified." FERC ordered the talks last month in an effor= t to resolve differences between producers and the state over the breakdown= of California's deregulated electricity market. The state has accused the= producers of manipulating supply to unfairly drive up prices. The producer= s have acknowledged that prices are high, but blame jumps in the price of n= atural gas, which fuels many power plants, and the workings of the free mar= ket. The bill for wholesale power in California soared to $27 billion last= year from $7 billion the year before. Davis has estimated that the state c= ould spend as much as $50 billion this year. ---- On the Net: Federal En= ergy Regulatory Commission: http://www.ferc.fed.us/ Copyright 2001, Los A= ngeles Times Electricity Cost Data Spread the Blame Power: Many suppl= iers charged more than the firms that Davis has pilloried, records show. RI= CH CONNELL and ROBERT J. LOPEZ and DOUG SMITHS TIMES STAFF WRITER July 10 = 2001 SACRAMENTO -- California's energy meltdown involves a far more divers= e group of wholesale electricity merchants than suggested by Gov. Gray Davi= s, who has aggressively blamed a handful of Texas companies, state records = show. During the first three months of this year--one of the worst stretch= es of power shortages during the crisis--an assortment of public and privat= e entities charged the state prices averaging well above some of those paid= to Texas firms, according to documents released to The Times on Monday by = the Department of Water Resources, which now buys power for California. Am= ong those setting and collecting some of the highest average prices per meg= awatt-hour were a Canadian public utility, a subsidiary of San Diego Gas & = Electric's parent company, and the Los Angeles Department of Water and Powe= r, the report shows. Their average prices ranged from $498 a megawatt-hour = charged by Powerex, the trading arm of British Columbia's BC Hydro, to $292= an hour by the DWP. In fact, some of the biggest private power companies s= ingled out for criticism by Davis and other state officials--Dynegy Inc., D= uke Energy and Mirant--charged less than the average prices the state paid = for the period. Those companies' average prices ranged from $146 to $240 pe= r megawatt-hour, according to an analysis of the documents. The figures co= ver the various types of spot and longer-term power purchased by the state = during three months that included rolling blackouts and more than a month o= f razor-thin reserves, leading to continuous power emergencies. Davis spok= esman Steve Maviglio said the governor has directed his sharpest barbs at p= rivate out-of-state generators because, in general, they have reaped the hi= ghest profits over the longest period. "You have to look at the whole pict= ure," Maviglio said. "The governor was expressing his displeasure with the= arrogance of the generators who wear cowboy hats," he said. "Their profits= were 100% to 400% above last year. . . . Just because there are other enti= ties who are charging us more [per megawatt-hour] doesn't change the fact t= hat we are getting ripped off by companies from Houston, Tulsa, Atlanta or = Charlotte." The report by the Department of Water Resources was provided t= o The Times on the same day the state released 1,700 pages of documents on = California's electricity purchases on the volatile spot market for the year= 's first quarter. The records detail how the state spent nearly $8 billion= buying power in the first five months of the year, and underscore the comp= lexity of the state's energy problem. They also show that patterns of high = prices are not limited to a few generators. Oscar Hidalgo, a spokesman for= the water resources agency, said that the reports together show that price= s were extremely volatile early in the year. "All the prices were high," he= said, noting the downward trend in costs since his agency began buying pow= er in mid-January. The average price per megawatt-hour for all state purch= ases went from $316 in January to $243 in May. Spot prices fell from an ave= rage of $321 per hour to $271, the reports show. In the first quarter of t= he year, some public entities' prices far exceeded those of the biggest pri= vate companies. For example, Houston-based Enron, one of the nation's bigge= st power traders, charged an average of $181 per megawatt-hour. And Atlanta= -based Mirant, which sold the most to the state, a total of $706 million, c= harged an average of $225 per megawatt-hour. By contrast, a Calgary, Canad= a, firm, TransAlta Energy, averaged $335 a megawatt-hour, and the Sacrament= o Municipal Utility District had average charges of $330 per megawatt-hour.= A spokesman for Enron, Mark Palmer, said recently that the "vilification = of Enron was based on politics, not facts." Spokesmen for BC Hydro could no= t be reached late Monday to comment on its huge sales to the state. In the = past, the utility has defended its pricing practices, saying it has offered= last-minute hydroelectric power that helped keep California's lights on. = A spokeswoman for Sempra, the parent company of San Diego Gas & Electric, s= aid late Monday the company was unable to comment because it had yet to see= the figures released by the state. Officials at DWP, who could not be reac= hed Monday evening, have defended their pricing, saying the costs of produc= ing the power needed by the state were extremely high. More Power Bought T= han Projected Hidalgo, of the Department of Water Resources, said his agen= cy's efforts, coupled with conservation by business and consumers and falli= ng natural gas prices, have begun to tame the state's market. Still, the s= tate had to purchase $321 million in power in April and May, about 10% more= than Davis' analysts had projected. Hidlago said that was because of hot = weather in May and other supply problems in April. He said reports will sho= w that power purchases fell short of state projections in June and early Ju= ly. The reports also will show that prices paid by the state were down in = June and July, partly because spot prices have fallen sharply, often to wel= l under $100 a megawatt-hour. A summary Department of Water Resources repo= rt released Monday credited Davis' program of nurturing new power generatio= n and establishing long-term power contracts with with "moving the Californ= ia electric energy industry closer to normalcy." Copyright 2001, Los Angel= es Times Duke Energy Asked to Allow Release of Data Power: Senator sa= ys the generator is refusing to make public some information crucial to the= price-gouging probe. Firm says it's complying. CARL INGRAM TIMES STAFF WRI= TER July 10 2001 SACRAMENTO -- The chairman of a Senate committee probing= suspected price gouging during the California energy crisis charged Monday= that Duke Energy is refusing to allow him to make public information key t= o his investigation. Sen. Joe Dunn (D-Santa Ana) said Duke has made the pr= ice bidding information from its Chula Vista plant available to committee m= embers and staffers. But under a federal confidentiality rule, the data can= not be made public without Duke's consent. The documents concern the Chula= Vista plant, which former employees have alleged was ramped up and down to= drive up power prices during three days in January. However, state records= show that the agency overseeing the electricity grid ordered those gyratio= ns to keep the power flowing throughout the state. Dunn said Duke's refusal= thwarts the committee's investigation and efforts to enact possible remedi= al legislation because the confidential information cannot be shared with o= thers in the Legislature or the public. Dunn said Duke cited a rule of the= Federal Energy Regulatory Commission that gives the company the authority = to decide which records it makes public and which stay secret. "The only o= ne who can release the data is Duke. We agreed to be bound by what is provi= ded in the FERC tariff, nothing more or less," he said. Former Employees T= ell of Maneuvers Dunn noted that the committee is considering trying to ob= tain the information elsewhere and "release it over Duke's objections." Th= ree former workers at the Duke plant near Chula Vista testified last month = under oath that the plant, among other things, was ramped up and down in wh= at seemed to be an effort to maximize revenue during the Jan. 16-18 emergen= cy. But Duke countered immediately that it had merely obeyed orders of the= California Independent System Operator, which keeps the state's electricit= y grid in balance. Duke later provided Cal-ISO documents backing up its exp= lanation. Duke executives insisted that the former employees failed to pro= vide a full picture of the plant's operation during the three days. But Du= nn, chairman of the select Senate committee on alleged price gouging, said = Monday that by refusing to authorize release of all the subpoenaed data, Du= ke was guilty of the same tactics. "Duke is trying to draw the impression = that it has [provided] the full picture. But they are fully aware that we c= annot draw any final conclusions until all that data has been released. Tha= t hasn't occurred," Dunn said. To make a determination whether the Chula V= ista power was withheld to drive up prices, Dunn said, the committee must p= ublicly examine "the bids Duke submitted from which the ISO issued orders t= o the plant." They include the expensive hour-ahead and day-ahead markets, = he said. Duke, a North Carolina-based wholesaler that operates several pla= nts in California, noted that it considers the information proprietary and = off-limits to legislators not on the committee. Duke spokesman Tom William= s insisted that the generator is attempting to comply with the committee's = demands. But he was unable to say whether Duke would agree to make the bidd= ing documents public along with other records the committee plans to turn o= ver. "We are complying now," Williams said. "There is some suggestion that= we are leaving stuff out when we have not had a chance to testify. . . . I= don't know what we are ultimately going to do." The committee had threate= ned to cite eight wholesale generators unless they provide pricing and bidd= ing documents by Wednesday. Six, including Duke, have said they would compl= y to avoid a contempt citation. Two, Enron and Mirant, were cited. Dunn sa= id the committee on Wednesday likely will give companies that are trying to= comply an extra week to do so, but others probably will be formally charge= d with contempt in a report to the full Senate. The upper house is the fina= l arbiter of such issues. Although there is scant precedent for levying pe= nalties against those cited for contempt, Dunn said he favors imposing seve= re fines. In 1929, the most recent case, a cement company executive was sen= t to jail. Copyright 2001, Los Angeles Times NEWS ANALYSIS Concern = Over Price of Long-Term Power Pacts Grows Embedded costs may yield more rat= e hikes, critics say, and the $43-billion total could complicate plans to r= escue Edison. DAN MORAIN TIMES STAFF WRITER July 9 2001 SACRAMENTO -- Eve= n as the summer progresses without blackouts, and Gov. Gray Davis prepares = for yet another news conference today to symbolically switch on a new power= plant, the work in the Capitol has shifted to the seemingly more daunting = task of balancing the books. It's a task with potentially far more long-la= sting implications for state coffers, for businesses' bottom lines and for = consumers' wallets. In particular, long-term power contracts trumpeted by = the governor's office as helping to bring stability to California's out-of-= control electricity market are having the opposite effect politically. A gr= owing concern about the $43-billion price tag of the contracts is complicat= ing one of Davis' most ambitious energy initiatives: a proposed financial r= escue of Southern California Edison, which already faces an uncertain fate = in the Legislature. Questions about the contracts come as California readie= s a complex $13.4-billion bond sale to reimburse the state's general fund f= or other power purchases. Critics worry that costs embedded in the contrac= ts, on top of the billions needed to pay for the Edison rescue, could lead = to additional electricity rate hikes for consumers. Key lawmakers, consumer= advocates and business lobbyists are urging that at least some of the pact= s be renegotiated. Citing a recent plunge in wholesale energy costs, these= critics say the state should work to shorten the duration of the contracts= and lower some of the prices. They argue that the state entered into the d= eals under duress after California's utilities neared insolvency and the st= ate Department of Water Resources took over the purchasing of electricity f= or more than 25 million residents. "They are vulnerable," Senate Energy Co= mmittee Chairwoman Debra Bowen (D-Marina del Rey) said of deals the state s= truck with independent power companies when prices were at record highs. B= owen lauds Davis administration negotiators for signing "the best deals the= y could." But she said that in the crisis atmosphere in which the negotiati= ons took place, "the state had two cards and the generators had 50." Contr= acts Open to Challenges The contracts could be challenged in court or, mor= e immediately, before the Federal Energy Regulatory Commission in Washingto= n. There, an administrative law judge could direct that the pacts be rework= ed as part of a settlement of allegations by Davis that generators overchar= ged the state for electricity by $8.9 billion. "We ought not to say, 'Fine= , the contracts were the best we could do,' " Bowen said. For his part, Da= vis says he is willing to accept partial payment of the $8.9 billion in the= form of contracts with terms more favorable to the state. He attributes th= e recent sharp drop in wholesale electricity prices to conservation, the ad= ministration's effort to increase power supply and--a major factor--the lon= g-term contracts, which slashed the state's reliance on the volatile daily,= or spot, market. "You can see the value of these long-term contracts . . = . dramatically shrinking our overall price, which is what matters to Califo= rnians," Davis said, pointing out that the average cost of power plunged 30= % from May to June. Davis energy advisor S. David Freeman, who helped nego= tiate the contracts, said they may end up costing less than $43 billion, gi= ven the recent decline in prices for natural gas, the main fuel for Califor= nia's electricity-generating plants. Freeman also compared critics to some= one who calls the fire department to douse a blaze. "After the fire is out,= " he said, "you complain about the water damage." The contracts have other= defenders, among them UC Berkeley economics professor Severin Borenstein, = who says the deals helped to tame the volatile spot market by reducing gene= rators' incentive to drive up prices, while reducing the state's exposure t= o wild swings in price. "The point of signing long-term contracts is not t= o get a great price; it's to reduce risk," Borenstein said. Still, experts= have been picking through the pacts ever since a Superior Court judge in S= an Diego, ruling in a California Public Records Act lawsuit by news organiz= ations and Republican lawmakers, ordered last month that Davis unseal the c= ontracts. An analysis done for the Assembly by three experts--one each rep= resenting Southern California Edison; the Utility Reform Network, a consume= r group; and large electricity consumers--concluded that the about $43-bill= ion price tag announced by the administration may not account for all the c= osts. When other expenses are factored in--ranging from environmental equip= ment upgrades to any new energy-related taxes--the contracts could cost an = additional 10% to 20%. "Once the contracts were made public," Senate Repub= lican leader Jim Brulte of Rancho Cucamonga said, "just about anyone who ca= n read began calling for those contracts to be renegotiated." As buyers' r= emorse spreads through the Capitol, the contracts increasingly are seen as = a hurdle--or a bargaining chip--as Davis and lawmakers confront fast-approa= ching deadlines in their effort to prevent the energy crisis from morphing = into a broader financial crisis. A bill pushed by Davis to avert bankruptc= y for the financially hobbled Southern California Edison must be approved b= y Aug. 15. The deadline could be tighter, because the Legislature is schedu= led to adjourn for a monthlong break July 20. Davis' rescue plan, along wi= th legislative alternatives, languishes in the Legislature. The plan, which= has little apparent support, would require the state to buy Edison's syste= m of transmission lines for $2.76 billion and permit the utility to charge = ratepayers for the rest of its back debt of $3.5 billion. Some lobbyists a= nd lawmakers believe that the electricity rate hike approved in March by th= e California Public Utilities Commission--at 3 cents a kilowatt-hour the la= rgest in state history--may not be enough. The revenue generated under the = new rate structure must cover the costs of the long-term power contracts an= d repay the planned $13.4 billion in bonds, which would be the largest muni= cipal deal ever. Whether there would be sufficient money left to pay for t= he Edison rescue remains to be seen. But some experts say the utility may n= eed to seek a separate rate hike to cover its costs. As written, the contr= acts have few escape clauses; Davis cannot simply walk away from them if he= concludes that prices are too high. Still, criticism persists and crosses = political lines. Harry Snyder, longtime Sacramento lobbyist for Consumers = Union, and Jack Stewart, president of the California Manufacturers and Tech= nology Assn., rarely find themselves on the same side of a debate. But in s= eparate interviews, they sounded similar themes. "If there is a way to buy= our way out of these contracts, even if we have to pay damages, we'd be be= tter off in the long run," Snyder said. Stewart, like other business leade= rs, does not advocate abrogating the contracts. But like many familiar with= the terms, he hopes that some deals can be renegotiated. "They are proble= matic," he said. In a move that critics fear could lock in high electricit= y prices for the next decade, the Davis administration is pushing the PUC t= o agree within a month to limit its authority to question costs incurred by= the Department of Water Resources as it goes about procuring power. State= Treasurer Phil Angelides said the PUC must act so he can complete the $13.= 4-b
|