The last one wasn't readible apparently.

Sue Mara
Enron Corp.
Tel: (415) 782-7802
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		 cc: 
		 Subject: SF Gate: Energy Experts Belie Davis' Rosy Prediction/Summer 
expected to be crunch time


 
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This article was sent to you by someone who found it on SF Gate.
The original article can be found on SFGate.com here:
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/02/28/M
N195654.DTL
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Wednesday,&nbsp;February 28, 2001 (SF Chronicle)
Energy Experts Belie Davis' Rosy Prediction/Summer expected to be crunch time
<A HREF="mailto:glucas@sfchronicle.com">Greg Lucas, Sacramento Bureau 
Chief</A>


   Sacramento -- Gov. Gray Davis' optimistic assessment that California may
be on the "back side" of its energy crisis flies in the face of what many
energy companies and other experts predict.
   California's real test will come this summer when electricity usage
sharply increases, and unless everything breaks the way Davis hopes,
predictions are that large chunks of the state will be in the dark.
   "We're not on the back side of this crisis. This problem is far, far
bigger than the governor is suggesting," said Gary Ackerman, executive
director for the Western Power Trading Forum in Menlo Park.
   "To characterize the problem that way shows a recklessness that feeds on
the popular notion we don't have an energy crisis. We do. We have a very
serious one that's going to hit us as temperatures and loads go up,"
Ackerman said.
   The Democratic governor's comments were made Monday in Washington, D.C.,
during an East Coast visit aimed at getting Washington and Wall Street
support for his energy plan.
   He admitted more hard work is needed, but said the state is on the "back
side of the crisis" because lawmakers have passed bills needed to help
lower electricity prices.
   "Does that mean we're home free?" Davis asked yesterday. "No."
   But he again repeated that the state is on the back side of the crisis.
   That is contrary to predictions by the Independent System Operator, which
oversees the state's power market.
   On any given day in June, the ISO estimates, the state will fall 6,815
megawatts short of demand. That would put nearly 7 million homes in the
dark, if it happens.
   In July, the expected shortage is 4,685 megawatts. In August, it's 5,297
megawatts. That's if California has a normal summer. If it's hotter than
normal, the shortage grows.
   The ISO's estimates tend to be conservative and do not include Davis'
conservation goal.
   But even if a 10 percent reduction were achieved in June that would save
roughly 5,000 megawatts, the state would still be short 1,800 megawatts.
   And there are other variables.
   Depending on the snowpack and reservoir levels, hydroelectric plants may
not be able to run at full bore, which would also worsen the situation.
   "That is something the governor cannot spin his way out of," said Sen. Tom
McClintock, R-Northridge.
   Davis said a combination of new power plants and energy conservation will
help the state get through this summer.
   The clock is running. The ISO predicts shortages of 3,030 megawatts in May
- - just two months away.
   "The real electricity crisis is going to be this summer, and I don't think
we've made enough progress there," said Severin Borenstein, director of
the University of California Energy Institute.
   California won't be able to build its way out of the energy crisis by
quickly approving and building new power plants, Borenstein said.
   The ISO's demand estimates already factor in the new power plants set to
come online this summer.
   "Unless we have a very mild summer and have lots of rainfall between then
and now," Borenstein said, "we are going to face some serious shortages."
   Like Davis, Borenstein says California needs to do more to conserve
energy. Unlike Davis, he favors raising prices on big power consumers to
give them an incentive to cut back.
   But the Democratic governor may be sending Californians a mixed message.
   By telling them the worst is over, he could undercut his plan by making
people believe more conservation is unnecessary.
   Excluding what lies ahead, there are also plenty of energy issues left
unresolved right now.
   Although Davis has reached a tentative deal with Southern California
Edison on purchasing its share of the state's transmission system for $2.7
billion -- no such deal exists with either Pacific Gas & Electric or San
Diego Gas & Electric.
   Some alternative energy producers, like co-generation plants, are shutting
down because the cash-poor utilities haven't paid them for several months.
No cash means no fuel to run the turbines that make the juice.
   Generators like Duke Energy and Reliant Energy aren't convinced the crisis
has passed.
   For starters, both companies are owed in excess of $700 million for
electricity bought by PG&E and Edison but never paid for.
   "There are a lot of issues still out there such as how much power your
state will require this summer, whether there is enough generation on the
ground or available commercially to handle the load if there is a
significant spike in demand," said Richard Wheatley, a Reliant spokesman.
   Harvey Rosenfield, head of the Foundation for Taxpayer and Consumer
Rights, has a slightly different take on whether the worst is over.
   "We've said all along it's a crisis inspired by the greed of the utilities
and the energy companies," Rosenfield said.
   "Now that taxpayers are paying $1 billion every three weeks to buy
electricity and the ratepayers are going to pay between $13 billion and
$20 billion, the companies are happy and the crisis is over. What more
could they want?"
   E-mail Greg Lucas at glucas@sfchronicle.com. 
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Copyright 2001 SF Chronicle
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