Please see the following articles:

Sac Bee, Mon, 6/11:  Who'll pay billions in PG&E debt? Consumers,
taxpayers and asset sales are among the options

Sac Bee, Mon, 6/11:  Dan Walters: Record undercuts governor's message on
handling energy crisis

SD Union, Sun, 6/10: Plan to pay businesses not to use power OK'd

SD Union, Sat, 6/9: Sempra may drop project in Escondido

LA Times, Sat, 6/9:  Hackers Victimize Cal-ISO

LA Times, Sat, 6/9: State Asks Pricing Curbs on 4 Firms

LA Times, Sat, 6/9: After-School Programs Threatened

LA Times, Sat, 6/9: Drop in Gas Price Raises Questions in Probe

LA Times, Sat, 6/9: New Power Plant Proposed for Riverside County

SD Union, Sat, 6/9: ISO seeks to pull rate authority from 4 firms

SD Union, Sat, 6/9: Short-circuited by the `so-called' electricity crisis
(Editorial)

LA Times, Mon, 6/11: Ventura County Businesses Sweat Out Power Crisis

LA Times, Mon, 6/11: The State PG&E Plan to Fell Oaks Fuels Anger Energy:
The utility contends the trees pose a fire threat to power lines. Critics
claim the firm wants to cut costs

LA Times, Mon, 6/11: The State Gov. Davis Feisty About Gaining Leverage Over
the 'Cowboys'

SF Chron, Mon, 6/11: Davis adds major ally in bid for price caps / Lieberman
invites governor to testify

SF Chron, Mon, 6/11: Bay residents tired of state crisis decrees / Conserving
or not, they ignore Davis

SF Chron, Mon, 6/11: Bay residents tired of state crisis decrees
Conserving or not, they ignore Davis

SF Chron, Mon, 6/11:  Developments in California's energy crisis

Mercury News, Mon, 6/11: Electricity traders' tech habits get scrutiny

Mercury News, Mon, 6/11: Davis is down, but history and politics are on his
side (Commentary)

OC Register, Mon, 6/11: Senate panel eyes price caps for power

OC Register, Sun, 6/10: New program will pay businesses to conserve

OC Register, Sun. 6/10: Davis' crisis management on upswing

OC Register, Sat, 6/9: Electricity notebook
Officials: Suppliers should refund excess charges

Individual.com (PRnewswire), Mon, 6/11: Calpine Announces 600-MW Inland
Empire Energy
Center Project Will Offer Electricity to One of California's Fastest Growing
Regions

Individual.com (PRnewswire), Mon, 6/11: SDG&E Applauds Expansion of
Assistance For Low-Income
Customers; CPUC Changes Mean More Eligible Customers, Increased Discounts

NY Times, Mon, 6/11: California Gets a Reprieve As Natural Gas Prices Drop

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Who'll pay billions in PG&E debt? Consumers, taxpayers and asset sales are
among the options.
By Claire Cooper
Bee Legal Affairs Writer
(Published June 11, 2001)
A judge's decision not to meddle with electric rates has left open the
biggest question in the Pacific Gas and Electric Co. bankruptcy case: Who
will pay the utility's nearly $10 billion in bills?
Ratepayers? Last week's decision by U.S. Bankruptcy Judge Dennis Montali left
rate-setting to the state Public Utilities Commission. But experts aren't
ruling out PUC approval of major increases in the prices charged to PG&E's
customers.
Taxpayers? They'd foot the bill if the state bailed out the utility, another
reportedly live option.
Creditors? They could, as one consumer advocate says, "cannibalize" each
other in competing for PG&E's assets. Though PG&E says creditors will all be
paid in full, it hasn't said how long that will take.
PG&E Corp., the utility's parent? It might be forced to infuse the utility
with cash. PG&E also could sue energy wholesalers to recoup overcharges or
could sell off its own power generators to raise cash.
Until last week, when Montali made it known that he won't raise retail rates,
the two major players in the bankruptcy proceedings -- the utility and the
official creditors committee -- had agreed on most matters that came up in
court, including the need for a rate increase.
"Now, it's going to get maybe a little uglier and less friendly," predicts
Jesse Fried, a bankruptcy law professor at the University of California,
Berkeley. "It looks like they're just going to have to sit down and decide
who's going to eat the loss."
Fried says the "right answer" should be PG&E Corp., which requested
deregulation of the energy market and profited from it until soaring
wholesale prices left the utility subsidiary with massive debt, in part
because retail rates were frozen.
Between the time deregulation was passed and the end of 2000, the utility
transferred $3.9 billion to its parent corporation before filing for
bankruptcy protection April 6, according to a state-ordered audit.
To force the corporation to repay the money, says Sacramento bankruptcy
lawyer W. Austin Cooper, Montali would have to conclude that the transfer
defrauded the utility's creditors.
Montali has the power "to pierce the corporate veil" to find the answer, says
Harvey Rosenfield, president of the Foundation for Taxpayer and Consumer
Rights.
But Cooper predicted a different scenario: sale of significant portions of
PG&E assets -- such as generators or transmission lines -- to pay creditors
and repay the state for electricity it has purchased on the wholesale market.
At a meeting Thursday between the utility and some of its creditors, PG&E
chief financial officer Kent Harvey said the utility's hydroelectric
facilities are worth between $3.9 billion and $4.2 billion. James Lopes, the
utility's bankruptcy lawyer, declared the subject of a possible sale off
limits at the meeting.
Rosenfield predicts it will remain off limits because, he says, the state
would begin talking about seizing the generators rather than risk a sale to
an out-of-state buyer.
He favors another option: suing the out-of-state companies that have been
charging the highest wholesale energy rates.
"If I were the small business that supplies pencils and paper clips to PG&E,
I would want to collect some money from the energy companies that overcharged
PG&E for power until the state stepped in to buy the power in the utility's
place," he said.
If PG&E filed an antitrust case against those companies, it could be tried in
Bankruptcy Court, according to Cooper.
Discussion on that subject also was ruled off limits by Lopes.
However, Harvey said the utility has requested a probe by the Federal Energy
Regulatory Commission.
And PG&E has been providing information to state agencies probing the
out-of-state firms, spokesman Ron Low said.
Rosenfield predicts growing pressure for a state-sponsored PG&E bailout like
the $2.76 billion plan proposed by Gov. Gray Davis to keep Southern
California Edison out of bankruptcy.
Under the Davis proposal, the state would have spent $2.76 billion to buy
that utility's power transmission lines. But the Legislature shelved Davis'
plan, and Rosenfield warned that any such bailout would be forced to a public
referendum, "along with any politicians who supported it."
Stanford University bankruptcy law professor Marcus Cole says the long-range
success of any plan for PG&E "depends entirely on the prospects for
profitability" -- that is, pegging retail energy rates to wholesale costs.
"PG&E is not a charity," Cole says. "It's there to provide a service. The
only way it's going to do that is if it can generate profits."

The Bee's Claire Cooper can be reached at (415) 551-7701 or
ccooper@sacbee.com.

Dan Walters: Record undercuts governor's message on handling energy crisis

(Published June 11, 2001)
Gov. Gray Davis spoke to a small business conference in Sacramento on May 30
and reminded attendees that "I'm a pro-business Democrat." He then launched
into a recitation of his standard pitch on the state's energy crisis -- that
it's being caused by "greedy energy companies" and that he's working hard to
solve it with far-reaching conservation programs and a massive power plant
construction program.
"For 12 years, California did not build one major power plant," he said,
adding that since he became governor, 15 have been approved, 10 are under
construction, and by 2003 "we will have more capacity than demand."
Davis is a politician who's renowned for staying, in the jargon of political
consultants, "on message." And what he told the business conference about
building power plants replicated what he had said dozens of times in
preceding weeks. During his April 5 televised speech on the crisis, for
example, Davis claimed, "In the 12 years before I took office, not a single
major power plant was built in California. Not one."
Clearly, Davis' message to Californians is that the state wasn't building
power plants before he began his governorship in January 1999, but that he is
moving, as he often says, "at warp speed" to license and build new plants and
close the supply-demand gap. There are two things wrong with that message:
His account of the pre-Davis record is not accurate, and his assertion that
huge amounts of new power generation are coming soon is, to say the least,
questionable.
First, the past. In the 12 years prior to his becoming governor, the
California Energy Commission licensed 17 power plants with a generating
capacity of about 1,900 megawatts. Twenty-one plants totaling 3,100 megawatts
began producing power during the period, including two considered "major" by
the usual definition of being 300 megawatts or more: the 300-megawatt
Sycamore plant in Kern County and the 385-megawatt Watson cogeneration plant
in Los Angeles County. Two more plants that started production during the
period were more than 200 megawatts.
After Davis became governor, but while the Energy Commission was still
controlled by appointees of his predecessor, Pete Wilson, the commission
licensed an additional 5,800 megawatts of generation, including nine major
plants.
Plant licensing has been speeded up in the last six months, but the total of
plants licensed by the Davis-controlled commission is less than 4,000
megawatts and none of those facilities has gone into production.
New plants are under construction, according to progress reports prepared by
the Energy Commission, but wheth- er all the recently licensed facilities
will be built, at least in the near future, is questionable. There is, power
industry sources say, an increasing reluctance by energy companies to commit
hundreds of millions of dollars to con- struct licensed plants (about
$750,000 per megawatt for new facilities) while Davis continues to denounce
them as greedy exploiters and hints he may seize plants under an emergency
declaration. Another factor is uncertainty over whether the state or
utilities will be financially able to buy the power.
One hint of that attitude has already surfaced publicly. Mirant Corp.
announced June 1 that it was delaying construction of a 530-megawatt
expansion of its Contra Costa County generation complex "because of
uncertainty about California energy market rules." Randy Harrison, head of
Mirant's Western operations, said, "We have to be able to determine that this
will be a viable investment before we can put a quarter of a billion dollars'
worth of steel on the ground."
Work on much smaller cogeneration and "peaker" plants has begun, but many of
the big ones apparently are being put on hold. Indeed, there's a secondary
market developing for selling licensed projects that could be built in the
future. Energy executives may be greedy, but they're not stupid and it would
be foolhardy to make multimillion-dollar commitments in a state that still
doesn't know where it's going in energy policy.

The Bee's Dan Walters can be reached at (916) 321-1195 or dwalters@sacbee.com
.

Plan to pay businesses not to use power OK'd

State program in effect when reserves are low
By Jennifer Coleman
ASSOCIATED PRESS
June 10, 2001
SACRAMENTO -- Gov. Gray Davis signed an executive order yesterday creating a
voluntary program that will use up to $100 million in state money to pay
businesses not to use electricity when reserves are low.
Davis said that since nearly 70 percent of energy use in California is by
commercial users, the program will "help mitigate and even avoid blackouts."
Participants, mostly large commercial users, will submit bids for reducing
their power. Grid operators will then compare those prices with the going
price for power and choose the cheapest option, said S. David Freeman, the
governor's senior energy adviser.
"We'd rather pay people in California to cut back than pay out-of-state
generators," he said.
The Independent System Operator, manager of the state's power grid, will
operate the program, and the state Department of Water Resources will back it
financially.
The program is the first of its kind paid for by the state. The Public
Utilities Commission, the Independent System Operator, and the state's
utilities have similar programs.
Kellan Fluckiger, Davis' energy adviser, said the size of the new program
would depend on how many participants the ISO can recruit.
The ISO releases information on bids for energy after a period of time, and
will probably treat bids for cutting power the same way, he said.

Sempra may drop project in Escondido

Dispute over power plant threatens industrial park
By Jonathan Heller
UNION-TRIBUNE STAFF WRITER
June 9, 2001
ESCONDIDO -- Officials of Sempra Energy Resources are considering pulling the
plug on a planned high-tech industrial park in the city because of conflicts
with a small power plant that would be built near the park's entrance.
Sempra executives will meet Monday to discuss the issue, a source familiar
with the project said late yesterday. If they decide to cancel plans for the
business park, Sempra still would move forward with its 500-megawatt plant on
the site in southwest Escondido, the source said. The 200-acre industrial
park was supposed to be built around the power plant, in the Quail Hills area
of the city.
Without the park, Sempra would not have to go through the city's permit
process, since the power plant would fall under the jurisdiction of the
California Energy Commission. If that happened, the city would have lost not
only the industrial park, but also the opportunity to have any say over the
Sempra project, such as setting conditions on it or requiring environmental
reviews.
Sempra's concern stems from a 49-megawatt plant that would be built at the
entrance to its business park by a company called CalPeak. The city no longer
has any say about that plant, however.
CalPeak, impatient with the city's permit process, opted to bypass the city
and go through a new expedited 21-day approval process with the state Energy
Commission, which approved the plant this week. That angered some city
officials, who said their land-use authority had been usurped.
Sempra wanted the commission to require that the CalPeak plant be shut down
in about two years, when its business park was ready to be marketed to
prospective tenants, the source said. The commission did not incorporate that
provision in its approval.
Officials from Sempra and some city officials fear the CalPeak plant would
not fit the upscale image envisioned for the park, and could hinder its
ability to attract high-end tenants.
On Wednesday, the City Council met in closed session to consider a court
challenge to the Energy Commission's approval of the CalPeak project, City
Attorney Jeffrey Epp said yesterday. "As of now I don't have any direction to
pursue litigation," Epp said.
Two city officials who asked not to be named said council members June Rady
and Tom D'Agosta voted in favor of suing to block the plant. Ed Gallo, Marie
Waldron and Mayor Lori Holt Pfeiler stayed silent. The lack of a majority
meant litigation could not move forward.
Sempra officials in charge of developing the industrial park and power plant
could not be reached for comment yesterday. But the source familiar with the
project said they were disappointed that the City Council decided not to
challenge the CalPeak plant in court.
The commission did approve several city suggestions regarding landscaping for
the CalPeak plant, and placing power lines underground, to help shield it
from the business park. But Sempra officials are not convinced that's enough.
"The city has basically decided to do nothing," the source said. "Obviously
that will hurt marketing efforts at the business park."
Pfeiler said late yesterday she was not aware of Sempra's request to the
commission to have the CalPeak plant shut down in two years.
"As far as I'm concerned the conditions Sempra and the city asked for were
met," Pfeiler said. "So Sempra should be ready to go full speed ahead on the
industrial park. For Sempra to even think about not building the industrial
park is very frustrating to the community."
City officials desperately want the business park to be built. They see the
Quail Hills parcel as the last best hope to have a large, high-tech
industrial park in Escondido that would provide thousands of high-paying
jobs.

Hackers Victimize Cal-ISO

By DAN MORAIN, Times Staff Writer

?????SACRAMENTO--For at least 17 days at the height of the energy crisis,
hackers mounted an attack on a computer system that is integral to the
movement of electricity throughout California, a confidential report obtained
by The Times shows.
?????The hackers' success, though apparently limited, brought to light lapses
in computer security at the target of the cyber-attack, the California
Independent System Operator, which oversees most of the state's massive
electricity transmission grid.
?????Officials at Cal-ISO say that the lapses have been corrected and that
there was no threat to the grid. But others familiar with the attack say
hackers came close to gaining access to key parts of the system, and could
have seriously disrupted the movement of electricity across the state.
?????Democratic and Republican lawmakers were angered by the security breach
at an entity that is such a basic part of California's power system, given
its fragility during the state's continuing energy crisis. One called the
attack "ominous."
?????An internal agency report, stamped "restricted," shows that the attack
began as early as April 25 and was not detected until May 11. The report says
the main attack was routed through China Telecom from someone in Guangdong
province in China.
?????In addition to using China Telecom, hackers entered the system by using
Internet servers based in Santa Clara in Northern California and Tulsa,
Okla., the report says. James Sample, the computer security specialist at
Cal-ISO who wrote the report, said he could not tell for certain where the
attackers were located.
?????"You don't know where people are really from," Sample said. "The only
reason China stuck out is because of the recent political agenda China had
with the U.S. . . . An ambitious U.S. hacker could have posed as a Chinese
hacker."
?????The breach occurred amid heightened Sino-American tensions after the
collision between a Chinese military jet and a U.S. spy plane. In early May,
there were hundreds of publicly reported computer attacks apparently
originating from China. Most of those incidents involved mischief;
anti-American slogans were scrawled on government Web sites.
?????The attack on the Cal-ISO computer system apparently had the potential
for more serious consequences, given that the hackers managed to worm their
way into the computers at the agency's headquarters in Folsom, east of
Sacramento, that were linked to a system that controls the flow of
electricity across California. The state system is tied into the transmission
grid for the Western United States.
?????"This was very close to being a catastrophic breach," said a source
familiar with the attack and CalISO's internal investigation of the incident.
?????On May 7 and 8, as the infiltration was occurring, California suffered
widespread rolling blackouts, but Cal-ISO officials said Friday that there
was no connection between the hacking and the outages, which affected more
than 400,000 utility customers.
?????"It did not affect markets or reliability," said Stephanie McCorkle, a
spokeswoman for Cal-ISO.
?????Officials of the agency made no public acknowledgment of the attack
until Friday when contacted by The Times. The agency did, however, call the
FBI, which is investigating.
?????McCorkle said Cal-ISO did not make a public disclosure about the hacking
"because it didn't impact the reliability of any of our internal networks."
?????"It didn't have a negative consequence and would not have impacted the
public or market participants," McCorkle said.
?????After the attack was discovered, the report says, investigators found
evidence that the hackers apparently were trying to "compile" or write
software that might have allowed them to get past so-called firewalls
protecting far more sensitive parts of the computer system.
?????The attackers focused on parts of the grid agency's computer system that
are under development. In what may have been the most significant lapse, the
system being developed was not behind a firewall, a security element designed
to keep out those who are not entitled to access.
?????Additionally, so-called tripwires that might have alerted agency
security personnel to the unauthorized entry were nonexistent. Nor were there
logs within the system that might have identified users entering the system
as the infiltration was occurring, the report notes.
?????What's more, dozens of ports into the computer system were open, when
only a handful should have been available.
?????"All servers should be hardened regardless of their role or location in
the network," the report says. "Only ports that are required to be open
should be opened; all others should be disabled."
?????Complicating the investigation, workers at Cal-ISO rebooted their
computers when the machines balked, apparently in response to the
infiltration.
?????"This action limited our ability to discover all files and activity that
may be related to this compromise," the report says.
?????Sample, the security engineer who wrote the report, downplayed the
potential threat and said the attack was "something that we've been
anticipating."
?????"It was a compromise, not really an attack," he said.
?????State legislators were not comforted by such distinctions.
?????"That's really amazing on two counts: that there were computers not
behind a firewall and it took 17 days to discover," said state Sen. Debra
Bowen (D-Marina del Rey), who chairs her chamber's Energy Committee.
?????Bowen, who was informed of the breach by The Times, called it a "serious
matter" and said she was "very concerned to learn about this from the L.A.
Times, rather than from the ISO itself." The lack of official notification,
she said, adds to her skepticism about whether the agency has been
forthcoming.
?????"It is embarrassing, so I can understand they would not want to talk
about it," Bowen said. "We're going to ask some questions."
?????The Independent System Operator, established in 1998 when the state
opened the newly deregulated electricity market to competition, is an
essential component of the state's electricity system.
?????The purpose of the nonprofit entity is to balance the flow of
electricity across the state and make last-minute power purchases to match
demand and avoid blackouts. The Legislature reconfigured the agency earlier
this year, giving Gov. Gray Davis the power to appoint the five-member board
that oversees it.
?????"It is troubling that it happened," said Sen. Tom McClintock (R-Thousand
Oaks). "It is disturbing that it took so long to be corrected. And it is
galling that it was not reported to the Legislature."
?????McClintock labeled as "ominous" the possibility that the attack came
from China. He said he is preparing a request for all documents related to
the breach and is considering requesting a formal legislative inquiry.
?????ISO board member Mike Florio, who represents consumers, said he had a
vague recollection that the board was informed of the attack. But he also was
surprised to learn some of the details.
?????"We hire people to deal with this stuff," he said, "and they said they
dealt with it."

Copyright 2001 Los Angeles Times

State Asks Pricing Curbs on 4 Firms
Energy: Cal-ISO wants U.S. action to bar alleged gouging by power plant
operators. The companies deny market manipulation.

By NANCY VOGEL, Times Staff Writer

?????SACRAMENTO--State officials intensified their assault on power plant
owners in California on Friday by asking the federal government to ban four
large companies from selling power at whatever prices the market will bear.
?????Mirant Corp., Duke Energy, Dynegy Corp. and Reliant Energy--owners of
more than a dozen power plants in California--have charged excessive prices
and manipulated the state's market, the California Independent System
Operator in alleges formal petitions to the Federal Energy Regulatory
Commission.
?????Given evidence of abuse, Cal-ISO argues in its filings, federal
regulators cannot legally allow the companies to continue selling electricity
in California at market-based rates. FERC granted that privilege to the
companies three years ago, when California opened its power industry to
competition. That privilege is now coming up for renewal.
?????By refusing to renew and setting prices instead by how much it costs the
companies to produce electricity, FERC could quickly control the high
wholesale electricity prices that have plagued California for the last year,
state officials say.
?????Cal-ISO, the Folsom-based agency that manages much of the state's
transmission grid, submitted a similar emergency motion to FERC on May 25,
urging a revocation of the rights of AES Corp. and Williams Cos. to sell
electricity at market rates. Together, the six companies that are the subject
of Cal-ISO's filings have the capacity to generate at least 17,000
megawatts--half of what California needs to meet peak summer demand.
?????In the flurry of petitions filed late Thursday and Friday, grid managers
also asked federal regulators to force the six companies to refund money they
have charged beyond the costs of operating their power plants since May 2000.
Cal-ISO did not specify a refund figure, but an earlier report by the agency
concluded that power sellers had overcharged the state by $6.7 billion
between May 2000 and March 2001.
?????"I'm optimistic that in one form or another we'll be able to get the
relief we're seeking," said Cal-ISO general counsel Charles Robinson. He said
his agency may go to court if FERC does not act by June 28.
?????Some company officials characterized the move as political.
?????"Obviously the filing is about the inference of market manipulation and
we haven't manipulated any markets," said Thomas J. Allen, a vice president
with Mirant, which owns three power plants in the San Francisco Bay Area and
recently signed a 19-month contract to provide the state with power.
?????"Just when we've started to work more closely with the state," he said,
"we hate to see this whole thing continue to be politicized."
?????Other generators pointed to a recent drop in wholesale power prices as a
sign that the market works and that California suffers mostly from a gap
between supply and demand. Power traders say prices are easing largely
because of cool weather across the West and snowmelt swelling Pacific
Northwest rivers that drive hydroelectric generators.
?????"We're gratified that market forces are clearly at work," said Tom
Williams, spokesman for Duke Energy, which owns major power plants on the
central coast.
?????FERC spokeswoman Celeste Miller said the agency will not comment on the
Cal-ISO filings.
?????To continue selling electricity at market prices, the energy companies
must show FERC that they each control less than 20% of California's market.
Critics argue that FERC's standard is too simplistic to prevent manipulation
of an electricity market where demand at times exceeds supply.
?????Robinson said Cal-ISO may file similar petitions with FERC to revoke the
market-based rate authority of energy traders--who act as middlemen--and
out-of-state companies that sell into California.

Copyright 2001 Los Angeles Times

After-School Programs Threatened
Finance: Budget plan kills funds for a project that includes efforts to boost
family-school ties and help single mothers keep sons out of gangs.

By CARLA RIVERA, Times Staff Writer

?????Nine-year-old Oscar Fuentes has run smack up against California's
slowing economy and high energy costs.
?????He and his playmates at Rosemont Elementary School in the Echo Park area
of Los Angeles were told this week that the highly praised after-school
program in which they are enrolled will get no more money from the state to
keep it going.
?????The implications are easy enough for even a fourth-grader to understand:
By the end of the month he may have no one to help him do his homework, and
the volunteer instructor may not come anymore to teach his friends how to
dance.
?????"We get to do fun activities and we get free snacks," said the
round-faced, dark-eyed Oscar, who was hard at work on math assignments after
school. "It's sad the program might be cut."
?????More than 36,000 youngsters and parents in Los Angeles, Ventura, Santa
Barbara and other counties could be affected by the demise of the Juvenile
Crime Prevention Program, begun in 1996 as a pilot project to provide
constructive activities for low-income children and their families.
?????About $9.7 million was included in the governor's January budget
proposal to keep the 12 centers operating for two more years. But in the
April budget revision, that funding was eliminated.
?????California's suddenly weaker financial health, affected by a combination
of surging energy expenses and softening revenue, is beginning to be felt
even on playgrounds, said legislators and other state officials.
?????"There had to be some hard choices," said Blanca Barna, a spokeswoman
for the California Department of Social Services. "It was important that
resources be focused on programs that are currently a priority." Those
priorities for the department include child welfare, adoptions, foster care
and independent living, she said.
?????Supporters are mounting a vigorous effort to have state funding restored
to juvenile program.
?????"It's a tough year," acknowledged Assemblyman Tony Cardenas (D-Sylmar),
chairman of the Assembly Budget Committee, which is considering such a
restoration proposal. "The economy nationally and in the state has shifted
now. But I'm personally pushing for [the program] and trying my best to
protect it throughout the entire process."
?????The committee's vice chairman, Assemblyman George Runner (R-Lancaster),
however, noted that the Legislature has already approved a separate
$121-million juvenile crime prevention package to be funneled through the
state Department of Corrections and that the threatened program could be
included in it.
?????"If other funding is available, I'd like to see why it can't be folded
in," Runner said.
?????Supporters laud the program for its focus on strengthening the
community. In addition to the after-school activities, it includes efforts to
improve the bonds between families and schools, help single mothers keep
their 10- to 14-year-old sons out of gangs, and counsel families with
youngsters already in the juvenile justice system.
?????In Long Beach, more than 200 people rallied at City Hall recently as the
City Council unanimously passed a resolution urging the governor to save that
city's program, which serves 3,000 people each year and is run by the YMCA.
?????"It has brought families together, kids, moms and dads, to take control
of their lives and be participants in their community," said Councilwoman
Bonnie Lowenthal.
?????She cited an example of participants drawing up a petition for a stop
sign at a dangerous intersection near a park as something "that had not
really occurred before in neighborhoods where so many of the families are
immigrants and non-English-speaking."
?????An independent evaluation by Philliber Research Associates of a sample
of families enrolled in the program found that it helped to significantly
decrease delinquent behavior, substance abuse, arrests and citations and
improve family cohesion, social adjustment and school achievement.
?????"If you start taking away programs that have proven to curb juvenile
crime just to save energy, all you're doing is moving one problem and adding
another," said Daniel Perez, who is in charge of the Ventura County program,
run by Interface Children Family Services. Until the state cutback was
proposed, it was expected to receive an $800,0000 grant to maintain tutoring
and counseling programs previously funded by the county.
?????About 450 people have been served by the Santa Paula center in the last
three years, and many in this low-income community--victims of domestic
violence, single working mothers, first-time juvenile offenders and at-risk
elementary school students--depend on the free services.
?????"If this funding goes, it eliminates our whole center," Perez said.
"It's very disheartening."
?????Such a prospect is indeed disheartening for Ana Romero, a 28-year-old
Echo Park mother of three.
?????For three years her daughter Jamillet, 11, has been enrolled in the
Juvenile Crime Prevention Program at Rosemont, run by the nonprofit community
group Para los Nios, and has made steady improvement in her school scores
and her self-esteem.
?????Romero's husband, Hector, works in construction, and Romero is about to
start a new job as a grocery store cashier. But without the after-school
program, she is not sure what the family will do.
?????"What my daughter learns here, she teaches to her brother and sister and
to me and my husband too," Romero said, waiting to pick up Jamillet from the
Rosemont program, which runs from 2 to 6 p.m.
?????Jamillet is enthusiastic, too.
?????"I feel like a teacher for the family," the dark-eyed little girl said
proudly. "I especially like going on the field trips, and it's sad if my
little brother won't be able to go to the program."
---
?????Times staff writer Jenifer Ragland contributed to this story.

Copyright 2001 Los Angeles Times

Drop in Gas Price Raises Questions in Probe
Regulation: Cost has fallen 96% since May 31, stirring accusations of an
artificial shortage.

By RICARDO ALONSO-ZALDIVAR, Times Staff Writer

?????WASHINGTON--As the price of natural gas destined for California power
plants continued to collapse Friday, new questions were being raised about a
controversial shipping deal between two offshoots of a Texas energy
conglomerate.
?????State officials and utilities have complained to the Federal Energy
Regulatory Commission that subsidiaries of Houston-based El Paso Corp.
restricted gas supplies on a major pipeline system last year, creating an
artificial shortage that sent energy costs soaring. The company has
steadfastly denied the allegations, which are the focus of a trial-like
hearing stretching into its fifth week at FERC.
?????But in a development that had the courtroom abuzz Friday, the markup for
natural gas shipped from producing basins in Texas to the Southern California
border has plunged by 96% since May 31, when the contract between the El Paso
subsidiaries expired and about 30 competitors entered the market.
?????According to data from Natural Gas Week, the markup between Texas and a
major California-border pipeline junction served by El Paso fell from $6.32
per million British thermal units on May 31--the last day of the
controversial deal--to only 23 cents Friday. A million BTU is about what a
typical Southern California household consumes in five or six days.
?????That put Southern California natural gas prices in line with the rest of
the country for the first time since last July.
?????State officials and California utilities said the price collapse
bolstered their case that the El Paso companies had been exercising market
power--engaging in monopolistic behavior.
?????"You can't help but think that the market is reacting to the difference
between having many shippers instead of one," said Kevin Lipson, a lawyer
representing Southern California Edison in the proceedings against El Paso.
"The market knows the difference between competition and monopoly."
?????Under the deal that just expired, one subsidiary of El Paso had obtained
the shipping rights for up to 17% of California's daily gas consumption
through a pipeline system owned by another subsidiary.
?????"We don't have an 800-pound gorilla any more," said Harvey Morris, a
lawyer for the California Public Utilities Commission. "We have a chimpanzee."
?????But Peggy Heeg, deputy general counsel for El Paso Corp., said other
factors--such as mild weather and increased storage levels of gas in
California--are behind the dramatic price swing.
?????"We are glad to see prices coming down and to see some relief for
Californians," Heeg said. "The price movement is consistent with what we are
saying, which is that supply and demand are driving prices."
?????The swift reversal in prices has raised suspicions at FERC.
?????"It's not enough to convict El Paso and send them to jail, but this
piece of information is certainly consistent with the idea that there was
market power," said an agency official.
?????"Prices had been dropping a little, but since June 1, it's become very
noticeable," said another agency official. "Obviously, one of the reasons has
to be that the capacity changed hands."
?????FERC's governing board can order El Paso to refund profits if it finds
that the subsidiaries tried to manipulate the California market.
?????One independent economist cautioned against a rush to judgment. "There
are a lot of things going on which in and of themselves could account for a
significant price decline," said Bruce Henning of Energy and Environmental
Analysis Inc. in Arlington, Va. "I would be unwilling to draw a causal link."
?????In addition to the weather and fuller storage cited by El Paso's Heeg,
increased conservation by Californians has reduced demand for electricity.
That, in turn, has dampened the market for natural gas, the fuel most
commonly used by the state's power plants.
?????But the industry also has come under strong political pressure in recent
weeks. In hearings before Congress and the California Legislature, lawmakers
spoke out against natural gas prices that were much higher than elsewhere in
the nation. California Atty. Gen. Bill Lockyer launched an investigation. And
FERC, in addition to the El Paso hearing, called an industry conference.
?????Plaintiffs' lawyers in the El Paso case say they believe the pressure
led El Paso Merchant Energy--which sells natural gas--to pass up an option to
renew its contract with El Paso Natural Gas Co., which owns the pipeline
system. Instead, El Paso Merchant settled for a much smaller chunk of
capacity on its sister company's system. El Paso says the decision was made
for business reasons, not in response to pressure from regulators.

Copyright 2001 Los Angeles Times

New Power Plant Proposed for Riverside County

By MITCHELL LANDSBERG, Times Staff Writer

?????Calpine Corp., on a breakneck pace to boost the amount of electricity it
produces in California, announced plans Friday to build a major power plant
in western Riverside County near the terminus of a hotly contested
transmission line.
?????The plant, the 10th the company has proposed constructing in California,
would be in the unincorporated Romoland area between Hemet and Perris, and
would supply enough power for about 450,000 homes.
?????"As a California-based company, we are extremely pleased to, yet again,
move forward on a project such as this," said John King, senior vice
president of business development for Calpine, which is based in San Jose.
The company has been eager to distance itself from the out-of-state energy
suppliers whom Gov. Gray Davis has portrayed as public enemies for their role
in California's energy crisis.
?????State officials greeted the announcement somewhat warily, noting that
Calpine has announced plans before that didn't pan out. Until the company
formally applies for licensing, the California Energy Commission will reserve
comment on the plans, spokesman Rob Schlichting said.
?????"It's basically a trial balloon," he said of the announcement.
?????Calpine officials said they intend to file an application for licensing
with the commission in July and to begin construction of the $325-million
plant sometime in the middle of next year. They said the plant could be
running by 2004.
?????Greg Lamberg, Calpine's director of business development, said the
company has already held extensive discussions with local officials in
Riverside County and has encountered no community opposition.
?????"We're finding just the reverse--we're finding a tremendous level of
support in the community," Lamberg said.
?????Local officials could not immediately be reached for comment. There has
been substantial opposition to another electrical project in the same
vicinity, a proposed 500,000-volt transmission line that San Diego Gas &
Electric wants to build through southwestern Riverside County.
?????The line would end at Southern California Edison's Valley substation in
Romoland. Calpine's proposed Inland Empire Energy Center would be built about
half a mile from the substation, on vacant land along California 74 near
Interstate 215.
?????Proximity to the Edison substation--and to a nearby natural gas
pipeline--make the location ideal, Lamberg said. Calpine officials said they
don't expect opposition to the SDG&E transmission line to translate into
opposition to their project.
?????"The reason folks are opposed to that line is that it's a means for San
Diego to import power," said Calpine spokesman Kent Robertson. "What we're
doing is, we're building projects to serve the local community. We think it's
kind of an apples-and-oranges comparison."
?????The area immediately surrounding the site is industrial, and Lamberg
said the company believes the plant will not cast a large "footprint" on the
environment. Calpine's plans call for a 600-megawatt combined cycle plant
that burns natural gas to generate electricity. Combined cycle plants, which
recycle their heat to make electricity a second time, are considered
extremely efficient and far cleaner than older, single cycle plants.
?????If the plant is licensed and built, it will help cement Calpine's
position as a major player in the California energy market. The company now
owns 11 mostly small, geothermal power plants in the state but has plans
underway for nine gas-fired plants that would add more than 5,000 megawatts
of power, enough to supply about 4 million homes. Three major plants are
already under construction in Northern California.
?????The Southland plant would be the third new generator in Riverside
County. Wisvest is building a 520-megawatt plant in Blythe, and there are
plans for a smaller, "peaker" plant in that city.

Copyright 2001 Los Angeles Times

NEWS
CALIFORNIA POWER CRISIS
ISO seeks to pull rate authority from 4 firms
Jennifer Coleman
?
06/09/2001
The San Diego Union-Tribune
1,2,6,7
Page A-3
(Copyright 2001)
SACRAMENTO -- Four major power suppliers to California have shown they can
control prices in the wholesale electricity market and should have to refund
excess charges, possibly up to billions of dollars, state grid officials said
yesterday.
The Independent System Operator, keeper of the state's power grid, also asked
the Federal Energy Regulatory Commission to revoke the market-based rate
authority for four generators: Duke Energy, Mirant, Dynegy and Reliant
Energy.
ISO analysts have estimated the state was overcharged about $6.7 billion
between May 2000 and March 2001.
That includes charges by generators other than the four in these filings, and
ISO officials didn't have an estimate on how much they were seeking from
Duke, Reliant, Mirant and Dynegy.
In order to continue charging market-based rates, generators must prove to
FERC that they don't have what is known as market power -- the ability to
charge whatever price they want without consequence.
Suppliers have to have that authority renewed by FERC every three years, and
most are up for review this summer.
Robinson said the companies have exhibited they have market power and the
ability to charge market-based rates should be revoked. The ISO asked FERC to
act on their request by June 28.
Tom Williams, spokesman for Duke Energy, said company officials were
reviewing the filing. Duke operates the South Bay Power Plant in Chula Vista
for its owner, the San Diego Unified Port District, under a long-term lease.
Richard Wheatley of Reliant Energy said the ISO order was "nothing but a
rehashing of previous allegations that have been repeatedly rejected by
FERC."
If FERC finds the companies do have market power, they could order them to
use cost-based rates, which limit company profits to a percentage above the
costs to produce power.
The ISO already has made similar requests regarding two other energy
companies, Williams and AES.
If the companies are found to have charged excessive rates, FERC can order
refunds.
Though ISO estimates $6.7 billion has been overcharged, some of that comes
from companies not under FERC's jurisdiction, such as Canadian firms or
municipal districts.
FERC has ordered $125 million in refunds, saying it can only examine prices
for power sold during Stage 3 emergencies, when reserves drop to below 1.5
percent.

OPINION
CALIFORNIA POWER CRISIS | LETTERS TO THE EDITOR
Short-circuited by the `so-called' electricity crisis
?
06/09/2001
The San Diego Union-Tribune
1,2,6,7
Page B-9:2,7; B-7:1; B-11:6
(Copyright 2001)
Re: "Is trading an insider's game" (A-1, June 6):
Does anyone actually doubt that the latest so-called "energy shortage" is
anything other than a case of those in position to do so racking up profits
at the expense of those unprepared to deal with the situation?
With profligate usage on the one hand and unmitigated greed on the other,
this showdown has all the makings of front page and prime time news blurbs,
but little more. One shouldn't assume from the hoopla that significant
improvements are coming.
We are told that more power plants and more oil and gas are on the way,
presumably to remedy the sort of "shortages" we now experience. Meanwhile,
elected officials still tout the free market as the answer to all our
problems.
In fact, energy markets are anything but free as they require endless public
and political largess in the form of rights of way and the financing of
staggering sums for infrastructure. All these costs are ultimately borne by
consumers in addition to "whatever-the- market-will-bear" energy costs.
Natural resources, including energy, should be public domain, along with
education, transportation and communication. PAUL STANGELAND Encinitas
As a native Californian, I have said for the last 40 years that the
environmentalists would destroy our good life.
I worked hard to build two new power plants in the early '70s, one being
Sundesert. The power company, SDG&E, said we would be short of power in early
2000, depending on the population explosion; this, plus new transmission
lines, were all abandoned because of lawsuits to protect "rocks and other
desert animals."
California has a master plan for roads and highways. Many cannot be built or
finished because of lawsuits protecting birds, snail darters and mesa mint,
so we have daily gridlock.
We do not need any more environmentalists in our government. This is why we
are where we are now. We need people who have an understanding of the "big
picture." They need to make better decisions and not hold up projects that
will benefit and improve the communities of San Diego. RUTH JOHNSON
Clairemont
Your editorial, ("Nuclear comeback," May 30), is a sign of the times. Still,
nuclear power has a unique problem which prevents it from being put into mass
production.
The problem is not a technical one. Those types of problems were solved long
ago. Nuclear power's unique deterrent is called "what if."
If "what ifs" were applied to other industries, no airplane would ever fly,
no bridge would ever be built and the space program would not exist.
California needs more nuclear power and less "what ifs." DOUGLAS C. SMITHDEAL
San Diego
So our utility is at it again, asking for an 18 percent rate hike. How about
an 18 percent payroll cut across the board for all those overpaid SDG&E
overpaid executives?
They have to be the most overcompensated group west of Congress. I don't own
any of the company's stock but I'd sure raise cain if I did. AL DORSETT San
Diego
Jim Goldsborough's column, ("An energy plan sponsored by Enron," June 4), is
full of misinformation.
California 's energy problem is blamed on Enron and the Bush administration.
The truth is, California has itself to blame, caused by passage of
electricity decontrol by the Democratic Legislature under the leadership of
Steve Peace.
Further, due to strong environmentalist influence, California has not been
able to build power plants or drill for oil or natural gas in the last 10 to
20 years. During this time, the population has grown by 50 percent.
Thus, California must import 20 percent of its electricity and has a shortage
of natural gas. Blaming Enron and the U.S. oil industry for high oil and
gasoline prices also is ridiculous.
The United States has to import 57 percent of its oil needs, so that oil
prices obviously are under the control of OPEC and other foreign producers.
President Jimmy Carter canceled our nuclear power program, apparently for
environmental reasons. This is the main reason that electricity supply is
short on both the West and East coasts.
Goldsborough is incorrect in stating that nuclear electricity is not
competitive.
Under Gov. Gray Davis, a gas-fired, electricity -generation program is bound
to fail due to the natural gas shortage. I predict continuing California
electricity blackouts for at least the next five years under the present
program promoted by Davis. One hopes the electorate will recognize that the
governor only is interested in the 2002 election and will defeat him.
President Bush and Vice President Dick Cheney are fundamentally correct in
stating that establishing price controls for California electricity purchases
would be counter-productive. Higher electricity prices not only would
decrease consumption but also would make it more attractive to build more
supply. J.W. BISHIP Olivenhain
President Bush campaigned on a compassionate conservative platform that has
morphed into the embodiment of crass commercialism.
While Cheney is the presumed shadow president, it looks more and more like he
has a powerful shadow in Kenneth Lay, chairman of Enron, the marketer of
energy products. Not only was Lay a prime mover in developing the so-called
"Bush Energy Policy," he recently hosted a secret meeting in San Francisco.
Its purpose was to urge influential Californians to push for deregulation and
stop investigations that "obstruct the process."
Now we know Lay has interviewed, "vetted," candidates for the Federal Energy
Regulatory Commission, a supposedly independent body whose purpose is to be a
watchdog on energy policy. The fox is clearly guarding the chickens. And this
scenario was arranged for, or at least permitted by, the same president who
decided that the Bar Association would no longer be involved in "vetting"
candidates for judgeships. MARILYN MILLER Carlsbad
Let's see if I have this correct. Gov. Davis has a plan to fix our energy
problems.
First, place the blame on our president not putting on price caps, which
would only increase energy use and blackouts.
Next, threaten the owners of power plants with a windfall tax or better yet,
hint that the National Guard will come and take over their plants. And the
companies must charge only what we want, which, for sure, will discourage
other companies from coming to our state and building plants to increase
production, that being the only real solution to the problem.
Well listen, Gov. Davis, I'm tired of paying so much for a pair of Levis; how
about a windfall tax on Mervyns or Sears, or let's just take them over and
get those prices down.
By the way, just a question for Democrats, Davis and Bob Filner, to name a
couple. This energy crisis did not just come about in the few months that
President Bush has been in office. What energy policy did the Clinton/Gore
team have?
Oh, that's right, they didn't have one for eight years, so perhaps instead of
pointing fingers, it's time to work together and get these new plants on
line. PHIL TORRE Mira Mesa
Prior to deregulation, we were all used to our electric bills which showed
our cost for electric power was from 10 to 11 cents per kilowatt hour. This
rate was roughly divided between the cost of power generation which was 2 or
3 cents and the remaining 7 cents for transmission and distribution.
Distribution costs have remained the same but power generation charges are
out of this world.
The state power authority has paid $348, and in an extreme case, $1,900, for
a megawatt-hour of electricity . Those figures convert to 34 cents and $1.90
for a kilowatth-hour for your home.
If journalists would start using kilowatt-hour prices when writing about our
power problems, I am sure the public would make stronger demands on the state
and federal governments to solve this problem.
Even President Bush would agree that $1.90 per kilowatt-hour for electric
power generation is not a fair and reasonable charge for something it took 3
cents to produce. L.K. McNEIL San Diego
The last few months have seen a flurry of news stories about California 's
energy shortage, but almost everyone has ignored our greatest energy
resource. The sun delivers an average of 6 kilowatt- hours of energy per
square meter per day in our desert areas. And solar plants can use mirrors to
concentrate the light intensity hundreds or thousands of times. This can be
used to spin turbines or drive Sterling engines.
Even 1995 technology could supply every single watt of electricity that
California consumed in 1999, using the sunlight that falls on just a 14-mile
square of otherwise useless desert land. Such a "combined cycle solar
concentrator" system can be built at less than one-third the cost of solar
photovoltaic panels, and could produce power for less than 7 cents per
kilowatt-hour.
No pollution would be released by such a system, not even thermal pollution,
so it would not contribute to global warming in any way.
Another advantage of solar-based power generation is that most of the power
is available when California needs it, during summer afternoons. And best of
all, we could bankrupt all of those energy gougers. GUY GROTKE Vista
My thermostat is turned down to near freezing; we don't use the dishwasher,
we use low energy bulbs and do the laundry after 7 p.m. - - so I guess it's
time to ask.
"Ask not what I can do for the city . . . but what can the city do for me? It
can, over time, save the taxpayer a bundle. It can do as Florida and several
other Sun Belt states have done and install solar- powered traffic lights.
If the entire state does it, we might dispense with the need for a generator
or two, and at the same time, hit a few Texans where it hurts most -- in the
pocketbook.
Come to think of it, a few locals with stock in those companies will shed a
tear or two -- how else to explain a few of the letters I've been reading?
MICHAEL R. ALBINO San Diego

California ; Zones Desk
Ventura County Businesses Sweat Out Power Crisis
CATHERINE SAILLANT
?
06/11/2001
Los Angeles Times
Ventura County Edition
Page B-1
Copyright 2001 / The Times Mirror Company
In the rush to save kilowatts, here is what it has come down to for one of
California 's small businesses: ketchup stains are detectable under
energy-efficient fluorescent bulbs but butter smears are not.
That's what the owners of Unique Cleaners in Ventura found before switching
to a specially installed light bank that saves energy but still casts enough
light to find spots.
Susan and Suk Cho then passed the information along to other cleaners,
joining an informal and growing network of small-business owners who are
sharing ways to sweat out a summer of predicted rolling blackouts and
spiraling electricity prices.
Unable to tap options available to bigger firms, small, energy-sucking
cleaners, ice shops, bakeries, restaurants and the like are turning to each
other for help.
"I'm sure we will be sweating more, working harder and getting less
accomplished," said Ken Ackerman, owner of ABC Ice House in Laguna Niguel,
who plans to shut off his air conditioner. "Whether we will end up better off
doesn't look likely."
They are getting a boost from the National Federation of Independent
Business, which is setting up councils around the state to come up with
conservation solutions for small-business owners.
"Small businesses are operating on very narrow margins," said Martyn Hopper,
state director of the agency. "Energy is a bottom-line cost that affects
their ability to pay salaries and benefits and their ability to exist. So
anything they can do to shave costs will help."
Projections of 30-plus days of summer blackouts could cost California
businesses an estimated $21.8 billion, a study by a California business
consortium found. Paired with electricity rate hikes of about 35% for
small-business customers, merchants have been forced to think hard about ways
to conserve and prepare for hourlong outages.
Although industrial users of electricity are seeing even higher price
increases, the burden falls heavily on small businesses because they have
fewer options, said Jack Kyser, chief economist for the Los Angeles County
Economic Development Corp.
Big companies with facilities in another state can switch production to that
state and get by, Kyser said. But mom-and-pop outlets are stuck here.
Many merchants can't just raise prices, because of fierce competition. And
reducing costs by trimming a bloated work force does not come into play when
there's no bloat, Kyser said.
Even business owners in Los Angeles, which has its own stable source of power
generation, are worried. Out-of-state customers, alarmed by reports of
California 's crisis, are getting jumpy about Los Angeles firms' ability to
fill contracts, regardless of the facts, Kyser said.
All this means that small businesses are barreling into uncharted territory.
"What we are finding is that small business, no matter where it is located,
is sort of scared silly," Kyser said.
A Kilowatt Here, a Kilowatt There
Many shop owners are just now getting down to the nitty-gritty details of how
to shave a kilowatt here and there.
The first thing Susan Cho did was remove every other bank of overhead
fluorescent bulbs at her 4,000-square-foot cleaners in Ventura. Then, she and
her husband, Suk, purchased a new industrial dryer and shirt presser that
operate on less energy.
She turned off an illuminated sign outside and unplugged a soda machine,
replacing it with a water cooler. Cho's 14 employees are instructed to turn
off lights whenever they are not in use and to completely fill dryers before
running them.
"I'd walk by and there would be two or three blouses in a machine," Cho said.
"No more."
These small steps added up to big savings. Cho estimates she spends $300 to
$400 less each month on electricity than she did a year ago. She told a
friend who also owns a dry cleaning shop what she had done, Cho said, and
also shared tips with her Korean business association.
Trimming energy usage is trickier for Ackerman. The Orange County ice
distributor can't just turn down the temperature on his 18-by-22-foot walk-in
freezer.
But he does plan to turn off the air conditioning elsewhere and use
lower-energy fans near the freezer during summer months.
Ackerman also checked out the possibility of buying a gas-powered generator
to run his compressor during hot afternoons. When he learned that he would
not receive a rate break for voluntarily taking his freezer offline, he
dropped the plan.
"I'm too small of a business to fall under any of the [rate-reduction]
programs available," Ackerman said. "So I'll just suffer through the summer."
At Print Masters in Long Beach, Dody Lopez runs jobs on the main copier only
during morning and late-afternoon hours. That way, power usage--and the heat
the energy-hungry machine generates--are idled during peak energy hours from
noon to 4 p.m.
All four copying machines are equipped with a device that switches to a
power-saving mode when not in use. Lights are dimmed wherever possible and
the air conditioning has been replaced by fans and fresh air from open doors.
"People are complaining about the heat, but we explain to them that we are
trying to be good citizens and trying to get through this crisis without
getting completely shut down," Lopez said. "Most people are understanding."
Shop Owners Cross Fingers
Conservation, of course, is not on the minds of everyone. Several merchants
report that they haven't given it a thought or have adopted a "whatever
happens, happens" approach.
And anger over the continuing crisis simmers, especially with those who have
done nothing to prepare.
"What can I do? Tell me what I can do," said an annoyed Vassil Perpchinkov,
owner of Guido's, an Italian restaurant in Malibu. "This problem should be
solved by those higher up--it better be."
Kerry Nelson, a Granada Hills print shop owner, doesn't have to worry about
blackouts. Like other businesses in Los Angeles served by the Department of
Water and Power, there is enough voltage to go around.
Because of that, Nelson said he has not attempted to cut back on usage.
Still, he has sympathy for other small-business owners.
"I deal with some people out there who have had some problems. I really feel
for them," he said. "But there's nothing I can do right now except be
grateful that I am not facing the same thing."
Small business can also help itself by collecting and distributing
conservation information in an organized fashion, said Hopper of the National
Federal of Independent Business.
The first of 10 local councils that will be created across the state met last
month in West Los Angeles to talk about ways to cut energy costs, he said.
Other groups will be formed in East Los Angeles, Orange County, the
Ventura-Santa Barbara region, San Diego, Sacramento and the Bay Area, Hopper
said.
Suggestions at the West Los Angeles gathering ranged from adding a temporary
energy surcharge to installing fluorescent bulbs that save energy.
"What business owners need right now is practical information on how to
reduce costs," Hopper said. "That's what these councils can offer."
The councils will encourage the federation's 38,000 California members to fan
out at the local level to make sure that the effect on small business is
taken into consideration when new energy-related laws are passed, he said.
That kind of lobbying is important amid all the commotion, Kyser said.
"It's going to be a very unsettling period for a lot of these small
businesses," he said.

California ; Metro Desk
The State PG&E Plan to Fell Oaks Fuels Anger Energy: The utility contends the
trees pose a fire threat to power lines. Critics claim the firm wants to cut
costs.
JOHN JOHNSON
?
06/11/2001
Los Angeles Times
Home Edition
Page B-6
Copyright 2001 / The Times Mirror Company
ARROYO GRANDE, Calif. -- Plans to cut down hundreds of oak trees to make sure
the power stays on this summer are generating a high-voltage protest in this
usually quiet retirement mecca on the Central Coast.
Pacific Gas & Electric Co. says it must remove trees under its power lines to
prevent fire from knocking out the Diablo Canyon nuclear plant at a time when
the state will need every watt it can get.
Critics say the utility just wants to save gardening costs.
"The bottom line is the dollar," said Jim Johandes, 51, whose avocado ranch
backs up to PG&E property in a rural canyon. He drove his vehicle to the top
of a hill one day last week and parked under giant towers bearing power lines
that carry 500,000 volts of electricity .
"Everything you see under these lines will be history," he said, pointing to
a thick canopy of oaks straddling the rolling brown hills.
The controversy over the oaks has not helped the battered reputation of the
utility.
Johandes, a big, white-bearded man who owned a Whittier company that
installed burglar and fire alarm systems until moving to the Central Coast
eight years ago, has opened his property to demonstrators.
Some sign-carrying activists pressed their case before the San Luis Obispo
County Board of Supervisors last week. One supervisor, Khatchik Achadjian,
called on PG&E to put the tree-chopping project "on hold until a compromise
can be developed."
So far, PG&E has shown no indication of scaling back plans to begin clearing
away undergrowth this month. Utility officials say protesters overstate the
damage, as well as the project's intent.
"Trees and the environment are very important to everyone, including PG&E,"
said Bill Roake, a spokesman for the company.
If PG&E has done anything to be ashamed of, he said, it is failing to
communicate effectively with the public. "We did not do a good job," Roake
said.
Some have accused PG&E of planning to clear-cut 15 miles of right-of-way from
the bluff on the coast where Diablo is located. Utility officials say fewer
than half the trees will be removed from a swath of brushland less than two
miles long between Carpenter and Price canyons. That is about 104 acres
altogether.
The goal, Roake said, is to open up the canopy so that fire cannot race along
the tops of the trees and threaten the power lines.
"The lines are right above a very, very heavy [wood and brush] fuel load,"
said Roake. "If there is a fire, you could have lines disrupted coming out of
Diablo."
Diablo Canyon is PG&E's single largest producer of power. Even if the flames
did not reach the overhead lines themselves, smoke from a fire could put
particulates in the air causing an arc, or crossover between adjacent lines.
Known as "phasing," that would essentially short-circuit the transmission
lines. Last year, Roake said, a small brush fire in the area knocked out the
lines for more than six hours, though part of that problem was an unrelated
equipment failure.
A worst case scenario, however, could knock out Diablo Canyon for three to
four days, Roake said.
PG&E said the cutting is being done to satisfy the state's Independent System
Operator, a nonprofit corporation whose job is to ensure the safety and
reliability of the state's energy grid.
Stephanie McCorkle, a spokeswoman, said the ISO did not order PG&E to remove
trees. "PG&E's preference was to remove trees rather than trim them," she
said in an e-mail response to The Times.
Roake acknowledged that the ISO didn't tell the utility to remove the trees.
"We felt this was the best way to keep the [grid system] safe and reliable,"
he said.
As for allegations that PG&E is cutting down trees to save money on
maintenance, Roake acknowledged that safeguarding 108,000 miles of
transmission lines is a big job. The utility spends $138 million annually to
trim or remove trees and brush.
But the tree project has nothing to do with its cash crunch, according to
PG&E. The Carpenter Canyon project was planned two years ago.
Johandes doesn't believe it. "They are doing it so they don't have to do
routine maintenance," he said.
PG&E has not made the argument, but conceivably could say it's not anybody's
business what it does with vegetation on its property. Oaks are not
endangered. There are 11 million acres of oak woodlands in California ,
according to the California Oak Foundation.
On the other hand, the oak looms large in the California myth. "It is kind of
our signature tree," said Janet Cobb, president of the foundation.
The state has lost 1.5 million acres of oaks since 1945, according to Cobb.
The PG&E plan, she said, is "a travesty. I can't imagine what they're
thinking. Yes, some trees need to be thinned out, but this is butchering."
Roake denied that. PG&E said it is approaching the project cautiously. The
first thing that will be done when work begins next week will be mowing down
the grassy underbrush known as ladder fuel. That could be an ignition point
for fire. After that, dead and diseased trees will be taken out.
"Then we'll see what that does for the canopy," he said.

California ; Metro Desk
CAPITOL JOURNAL
The State Gov. Davis Feisty About Gaining Leverage Over the 'Cowboys'
GEORGE SKELTON
?
06/11/2001
Los Angeles Times
Home Edition
Page B-6
Copyright 2001 / The Times Mirror Company
SACRAMENTO -- The phone rang and it was the governor. "Just wanted to talk a
little bit about electricity ," he said. "I think we're on the verge of
breaking the exorbitant spot market. . . .
"Believe me, we're still in for a volatile summer. But our plans are
beginning to fall into place, and we finally have some leverage. The only
thing these greedy out-of-state generators respond to is leverage. . . .
"The point is, we're turning the corner."
Gov. Gray Davis was feeling good--about plunging wholesale electricity prices
(lowest since April 2000), about conservation (Californians used 11% fewer
kilowatts last month than in May 2000), about more supply (one major Kern
County power plant is about to go online two months early) and about new poll
numbers.
Davis believes his "summit" with President Bush two weeks ago in L.A.
burnished his image. His pollster, Paul Maslin, found that the governor's job
approval rating rose from 46% in early April to 52% after the Bush meeting.
The president's job rating in California , meanwhile, fell from 56% to 43%.
Bush handed Davis a microphone to shout his message: that he's building
plants and conserving electricity --but only federal regulators can order
price relief, and they've refused. That word finally got through to people,
the governor thinks.
And this was why Davis had phoned--to stress that he does have a plan, an
endgame, and it's working. Critics to the contrary.
"It's premature to declare victory. It's not the time to pop champagne
corks," he said. "But we're turning the corner."
Davis must have said "turning the corner" and attributed it to "leverage" 20
times in our 30-minute conversation. And the anti-generator rhetoric rolled
naturally off his tongue, having by now become integral to his everyday
speech.
"The name of this game is leverage," he said. "If you don't have leverage
over these cowboys, they will steal you blind. They'll take every dime you
have, all the clothes you own, and be laughing all the way to the bank."
These cowboys, of course, are mostly Texans. Critics have protested that a
governor cannot keep calling people names and still expect to do business
with them.
"That's the only thing that gets their attention," Davis asserted. "They're
embarrassed as sin. The last thing they want is any attention. They're lucky
they're not in jail. I mean, this is highway robbery. . . . They've been
selling us back our own electrons at 800% more than we paid for them two
years ago at a time we're conserving. . . ."
A confluence of events has provided the leverage, Davis said:
* His administration has locked up 43% of the state's electricity needs with
long-term deals at reasonable prices, reducing dependence on the sky-high
spot market.
* California has become the nation's No. 1 electricity conserver.
* The U.S. Senate has turned Democrat and is pressuring federal regulators.
* Bush has named two new members to the Federal Energy Regulatory Commission
who, unlike the chairman, don't seem like power company toadies. Indeed, the
FERC is probing predatory price gouging by El Paso natural gas.
"And then you have a governor who's quick to get in the face of greedy
out-of-state generators," Davis continued. "Shame them for being the highly
irresponsible citizens they are. . . . Naming names and holding people
accountable. Exposing their willingness to bleed California dry. . . . Taking
no prisoners."
A governor also threatening to tax windfall profits and seize power plants.
Davis recently went after municipal utilities, as well, after learning they
occasionally had been gouging the state even worse than the private
profiteers. The governor warned he'd seize their excess power unless they
agreed to sell it at a small profit, maybe 15%.
He was especially irked at the L.A. DWP, and told both Mayor Richard Riordan
and Mayor-elect James K. Hahn.
"They didn't like it," Davis recalled. "They said it sounds like a threat. I
said it is a threat. You've made a fortune off us. You should be embarrassed
to be taking advantage of the state during its time of need. We certainly
came to your aid after the 1994 earthquake."
I reminded Davis that critics fault him for not acting more quickly a year
ago. They complain he should have pressed for long-term contracts then and
pushed for consumer rate hikes to salvage private utilities. Does he
acknowledge he could have moved faster?
"No, I don't concede one iota," he replied. "That's just all armchair
quarterbacking. I mean, I've taken on the biggest challenge this state has
faced in 50 years. We're turning the corner. . . ."
Could be. But this summer will be a tricky corner to turn. Davis still could
be run down by rolling blackouts and Texas cowboys.

NEWS
Davis adds major ally in bid for price caps / Lieberman invites governor to
testify
Rick DelVecchio
?
06/11/2001
The San Francisco Chronicle
FINAL
Page A.1
(Copyright 2001)
Gov. Gray Davis picked up another powerful ally yesterday in his plea for
federal aid for California 's crippling power bills: Sen. Joseph Lieberman,
who has named Davis to go head-to-head with federal energy regulators at a
Senate hearing on the crisis.
Davis said yesterday he was thrilled that the Connecticut Democrat would
shine a light on the Federal Energy Regulatory Commission, which refuses to
fully cap wholesale electricity prices even though critics contend it has a
legal duty to prevent price gouging.
"I believe (FERC) is on a sit-down strike," Davis said in a joint phone
conference with Lieberman. "The result has been skyrocketing prices in
California and a recession, which does not bode well for the American
economy."
California has been looking to President Bush for help in the energy crisis,
but the White House has steadfastly refused to endorse price caps, saying
they do nothing to increase supply or promote conservation.
"The president will continue to work with California to address their growing
energy needs, but does not want to take action that will make the problem
worse, such as price controls," White House spokeswoman Anne Womack said
yesterday.
Lieberman's Governmental Affairs Committee, which he took over in the
partisan shift that followed Vermont Sen. Jim Jeffords' switch from
Republican to independent, will take up the power crisis on Wednesday with a
hearing on the effects of deregulation on the energy and natural gas
industries. It will hold a second session on June 20 to explore whether FERC
is doing its job to ensure reasonable energy prices.
Lieberman said Davis would appear on June 20 as the key witness. The event
will put Davis, a Democrat, in the same room with FERC members, three of whom
are Republicans and two are Democrats.
Lieberman said Davis' appearance would enable the committee to take what he
called a balanced look at the crisis, which has been riven by partisan and
ideological differences over the federal government's role in the energy
markets.
"We have a market in California that has not really been a free market,"
Lieberman said. "Therefore, we have to use whatever methods we have . . . to
get those selling electricity to act more reasonably."
Lieberman is the latest high-profile Washington figure to join Davis' plea
that the law demands price controls by FERC while California works on
long-term fixes for the flawed deregulation scheme put in place five years
ago.
Lieberman said he was not advocating arbitrary price caps but rather price
relief that would guarantee power producers a reasonable profit.
"I'm not deluding myself," he said. "This is going to be a battle."
He said he hoped the hearings would compel the commission to "do what the law
says they should be doing."
"Hopefully, through hearings and direct dialogue, and perhaps debate, we can
get the commission to fulfill its statutory responsibility," Lieberman said.
Davis said he believed the energy industry would respond to political and
legal pressure, and noted that recent price drops in California showed that
the campaign already was having an impact.
"The last few days of price relief is solely the result of extreme pressure
from Washington and from Sacramento," Davis said. ". . . We finally have a
little leverage, and we can't let up."
In an interview yesterday on NBC's "Meet the Press," Lieberman criticized the
president's plan to generate more energy through drilling and argued that the
nation's energy policy should center on conservation, with some production
and new technologies such as fuel cells.
But Republican Sen. Mitch McConnell of Kentucky said on the program that
conservation was not enough.
"Everyone knows that conservation is important," he said. "The president
knows that. But you can't conserve our way out of this problem."

NEWS
Bay residents tired of state crisis decrees / Conserving or not, they ignore
Davis
Meredith May
?
06/11/2001
The San Francisco Chronicle
FINAL
Page A.1
(Copyright 2001)
Now that the California governor has declared victory in the energy wars,
many Bay Area residents are vowing to wear their low- watt fluorescent haloes
and continue conserving power this summer.
But others said there never was a war to begin with, and one of them, a
Berkeley psychotherapist, declared she would continue to commit that
California sin of all sins -- she will not unplug her hot tub.
Around the Bay Area, people say it doesn't matter what Gov. Gray Davis says
about turning the lights off or about power companies, they're sick of the
whole thing and just want to live their lives.
Some will keep the conservation changes they made so they can save more money
on future energy bills, while others secretly admit they didn't change much
anyway so the latest news isn't really news.
Last week, the governor announced that the state had "basically won the war"
on high energy prices, after wholesale electricity prices dropped to their
lowest level in a year, and natural gas prices fell as well.
Davis said prices had plunged after 38 long-term power contracts signed by
the state forced power companies to compete for buyers, helping push
electricity prices lower.
Despite the dropping prices, Davis warned Californians to keep their power
use in check.
"I'm a new conserver now," said Nouvella Lumford of Oakland, who came to
Albany Bowl Friday to knock some pins with her East Bay senior citizens'
league, Young At Heart.
To save money during the energy crisis, Lumford replaced her electrical wall
heaters with central heat and trained herself to unplug all her appliances
before she left the house.
Soaring energy prices meant her bill kept going up anyway, and even hit the
$500 mark. But she's going to stick to her new habits.
"Now if prices go down, and I continue to conserve, I might be able to save a
little money so I can travel on the train -- I love to travel, honey!" she
said.
BOWLING ALLEY CONSERVES
While Lumford bowled under a well-lit lane, the back half of the bowling
alley was in the dark. When there aren't enough people to fill all the lanes,
the managers now shut down the lights to save money, said assistant manager
Debbie Fairhurst. "We also turn off the ceiling lights at night, which is
new, and we turned the air down. Customers didn't seem to mind, so why not
keep it up if it can help lower our bills?"
For windsurfer Brett Staib, who was getting ready to jump into the water off
Point Isabel in Richmond, the possible end of the state's power problems is
not that exciting. His whole approach to the energy crisis was to keep
looking on the bright side.
"Rolling blackouts aren't so bad," he said. "So what if you have to stop what
you're doing for an hour and go take a walk?"
Staib's contribution to the energy crunch was to turn off his front door
light at night. Not much, he admitted, but he already used fluorescent bulbs
inside before the crisis because they use less power.
"I don't think I'll need to use much air conditioning this summer because it
stays pretty cool around here," he said.
But for others who live in the land of no mercy, like Sandra Golightly of
Antioch, keeping the air conditioning off this summer is not going to happen.
Golightly said she and her family were going to keep living like they always
did in a home they equipped for energy efficiency a decade before it was
trendy.
ARIZONA EXPERTISE
A Phoenix transplant, Golightly knows some tricks: double insulation, ceiling
fans in every room, honeycomb blinds and wooden plantation shutters for the
windows, and timers on the heat and air conditioning.
"We didn't change much during the crisis because we're already doing so
much," she said. "We even landscaped the backyard so it would shield the
sun."
If the energy woes do indeed fade away, people will probably keep conserving
for a little while, but eventually slip back to their old habits, Berkeley
author Elayne Savage said as she relaxed in the sunshine in Berkeley's Fourth
Street shopping district.
"It's just like the water crisis, when we were being so good and planting
these succulent and cactus gardens," she said. "Eventually that faded away."
But Richard Rivas of El Sobrante said he was a changed man. A drummer in a
Motown band by night, he washes delivery trucks in Oakland's warehouse
district by day.
"I stopped turning on the heat and built fires, or put on a hooded
sweatshirt," he said. "It's not that bad, really, and I think we all got a
little too used to being comfortable. We should all conserve this summer so
there's enough for everybody."

Bay residents tired of state crisis decrees
Conserving or not, they ignore Davis
Meredith May, Chronicle Staff Writer
Monday, June 11, 2001
,2001 San Francisco Chronicle
URL: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2001/06/11/MN238305.DTL
Now that the California governor has declared victory in the energy wars,
many Bay Area residents are vowing to wear their low-watt fluorescent haloes
and continue conserving power this summer.
But others said there never was a war to begin with, and one of them, a
Berkeley psychotherapist, declared she would continue to commit that
California sin of all sins -- she will not unplug her hot tub.
Around the Bay Area, people say it doesn't matter what Gov. Gray Davis says
about turning the lights off or about power companies, they're sick of the
whole thing and just want to live their lives.
Some will keep the conservation changes they made so they can save more money
on future energy bills, while others secretly admit they didn't change much
anyway so the latest news isn't really news.
Last week, the governor announced that the state had "basically won the war"
on high energy prices, after wholesale electricity prices dropped to their
lowest level in a year, and natural gas prices fell as well.
Davis said prices had plunged after 38 long-term power contracts signed by
the state forced power companies to compete for buyers, helping push
electricity prices lower.
Despite the dropping prices, Davis warned Californians to keep their power
use in check.
"I'm a new conserver now," said Nouvella Lumford of Oakland, who came to
Albany Bowl Friday to knock some pins with her East Bay senior citizens'
league, Young At Heart.
To save money during the energy crisis, Lumford replaced her electrical wall
heaters with central heat and trained herself to unplug all her appliances
before she left the house.
Soaring energy prices meant her bill kept going up anyway, and even hit the
$500 mark. But she's going to stick to her new habits.
"Now if prices go down, and I continue to conserve, I might be able to save a
little money so I can travel on the train -- I love to travel, honey!" she
said.
BOWLING ALLEY CONSERVES
While Lumford bowled under a well-lit lane, the back half of the bowling
alley was in the dark. When there aren't enough people to fill all the lanes,
the managers now shut down the lights to save money, said assistant manager
Debbie Fairhurst. "We also turn off the ceiling lights at night, which is
new, and we turned the air down. Customers didn't seem to mind, so why not
keep it up if it can help lower our bills?"
For windsurfer Brett Staib, who was getting ready to jump into the water off
Point Isabel in Richmond, the possible end of the state's power problems is
not that exciting. His whole approach to the energy crisis was to keep
looking on the bright side.
"Rolling blackouts aren't so bad," he said. "So what if you have to stop what
you're doing for an hour and go take a walk?"
Staib's contribution to the energy crunch was to turn off his front door
light at night. Not much, he admitted, but he already used fluorescent bulbs
inside before the crisis because they use less power.
"I don't think I'll need to use much air conditioning this summer because it
stays pretty cool around here," he said.
But for others who live in the land of no mercy, like Sandra Golightly of
Antioch, keeping the air conditioning off this summer is not going to happen.
Golightly said she and her family were going to keep living like they always
did in a home they equipped for energy efficiency a decade before it was
trendy.
ARIZONA EXPERTISE
A Phoenix transplant, Golightly knows some tricks: double insulation, ceiling
fans in every room, honeycomb blinds and wooden plantation shutters for the
windows, and timers on the heat and air conditioning.
"We didn't change much during the crisis because we're already doing so
much," she said. "We even landscaped the backyard so it would shield the
sun."
If the energy woes do indeed fade away, people will probably keep conserving
for a little while, but eventually slip back to their old habits, Berkeley
author Elayne Savage said as she relaxed in the sunshine in Berkeley's Fourth
Street shopping district.
"It's just like the water crisis, when we were being so good and planting
these succulent and cactus gardens," she said. "Eventually that faded away."
But Richard Rivas of El Sobrante said he was a changed man. A drummer in a
Motown band by night, he washes delivery trucks in Oakland's warehouse
district by day.
"I stopped turning on the heat and built fires, or put on a hooded
sweatshirt," he said. "It's not that bad, really, and I think we all got a
little too used to being comfortable. We should all conserve this summer so
there's enough for everybody."
E-mail Meredith May at mmay@sfchronicle.com.
,2001 San Francisco Chronicle ? Page?A - 1

Developments in California's energy crisis
The Associated Press
Monday, June 11, 2001
,2001 Associated Press
URL:
http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/06/11/state1
050EDT0154.DTL
(06-11) 07:50 PDT (AP) --
Developments in California's energy crisis:
MONDAY:
* No power alerts as reserves stay above 7 percent.
SUNDAY:
* In a conference call with reporters, Gov. Gray Davis and Sen. Joseph
Lieberman, D-Conn., again call on the Federal Energy Regulatory Commission to
cap wholesale electricity prices.
* No power alerts as electricity reserves stay above 7 percent.
WHAT'S NEXT:
* Davis' representatives continue negotiating with Sempra, the parent company
of San Diego Gas and Electric Co., to buy the utility's transmission lines.
* The Department of Water Resources and Los Angeles Department of Water and
Power have until Monday evening to turn over documents requested by the state
Senate committee investigating market manipulation.
* A state Assembly committee considers a bill Monday that would have
utilities schedule blackouts up to a month ahead.
* The Senate Governmental Affairs Committee, which Lieberman chairs, holds
hearings June 13 and June 20 on the power crisis.
THE PROBLEM:
High demand, high wholesale energy costs, transmission glitches and a tight
supply worsened by scarce hydroelectric power in the Northwest and
maintenance at aging California power plants are all factors in California's
electricity crisis.
Southern California Edison and Pacific Gas and Electric say they've lost
nearly $14 billion since June to high wholesale prices the state's
electricity deregulation law bars them from passing on to consumers. PG&E,
saying it hasn't received the help it needs from regulators or state
lawmakers, filed for federal bankruptcy protection April 6.
Electricity and natural gas suppliers, scared off by the companies' poor
credit ratings, are refusing to sell to them, leading the state in January to
start buying power for the utilities' nearly 9 million residential and
business customers. The state is also buying power for a third investor-owned
utility, San Diego Gas & Electric, which is in better financial shape than
much larger Edison and PG&E but also struggling with high wholesale power
costs.
The Public Utilities Commission has approved average rate increases of 37
percent for the heaviest residential customers and 38 percent for commercial
customers, and hikes of up to 49 percent for industrial customers and 15
percent or 20 percent for agricultural customers to help finance the state's
multibillion-dollar power buys.
,2001 Associated Press ?

Electricity traders' tech habits get scrutiny
Posted at 10:23 p.m. PDT Sunday, June 10, 2001
BY JENNIFER BJORHUS

Mercury News

State officials investigating California's extraordinary energy prices are
zeroing in on how energy traders use the technology tools of their profession
-- from e-mail and specialized software to Internet energy data sites and
online trading floors.
This technology may be key, they say, to helping traders acquire the intimate
knowledge needed to manipulate California's troubled energy market. With
minute-to-minute knowledge of market conditions, some traders went even
further, two lawsuits charge, illegally coordinating bids and sending
electricity prices to record-breaking levels.
The state Attorney General's Office has subpoenaed from power generators
software used to formulate bidding strategies, names of employees providing
computer support, communications with a prominent industry Web site and the
name of firms that handle computer networks.
And a state Senate committee has hired an information technology consultant
to help them look into how traders tracked patterns on the state's
Internet-based spot market, among other things.
``Once you were knowledgeable about its operations, the opportunity to game
it became pretty obvious,'' said Sen. Joe Dunn, D-Garden Grove, who chairs
the committee.
Anti-trust laws
Working together, or colluding, to fix prices is illegal and violates state
and federal anti-trust laws.
Sharing sensitive industry data, if it involved financial markets, would be
considered insider trading and would be treated far differently, said Anjali
Sheffrin, head of market analysis for the Independent System Operator, which
manages the state's power grid.
The Securities and Exchange Commission polices the nation's stock markets,
but wholesale energy trading goes largely unwatched by federal regulators.
San Diego attorney Mike Aguirre agreed with Sheffrin. Aguirre is part of a
team of lawyers who have filed two lawsuits against leading power generators
such as Dynegy, Duke Energy and Williams Energy Services.
``It's basically an embryonic kind of trading market that involves the
sharing of inside information, and the only reason they're getting away with
it is there's no SEC cop,'' he said.
Energy companies dismiss these charges as speculation.
``All of these `What ifs?'?'' said Dynegy spokesman Steve Stengel. ``The fact
of the matter is we've played by the rules, we've acted ethically, we haven't
done anything wrong.''
Energy companies say the way they use technology is all above board.
``That's something that we're proud of, that we have all of the tools to do
the best possible job in the trading,'' said Paula Hall-Collins, spokeswoman
for Tulsa-based Williams Co.
Not everyone is persuaded that energy companies actually conspired to hike
prices.
Some public officials and energy industry players call the technology focus a
red herring. California's energy problems are far more fundamental, they say,
than click-happy energy traders with spreadsheets. The now-defunct California
Power Exchange, for example, was something of a sitting duck, unable to
freely shop around for the best electricity prices.
Wealth of data
Other experts believe the sheer wealth of data floating around -- from river
flows to 30-day forecasts of power line outages -- gives traders an unfair
advantage. ``That's exactly the issue,'' said Severin Borenstein, director of
the University of California Energy Institute. ``The issue is whether all
this information is actually doing more harm to competition than benefit to
the efficiency of procuring and selling power.''
The best illustration of this is a somewhat legendary Web site blunder.
In that incident, an energy industry association called the Western Systems
Coordinating Council posted highly sensitive real-time data about
transmission of extra-high voltage electricity in California.
Alarmed that such information could be used to game the market, the state's
grid operator last October demanded that the trade group take the information
off the site, which it did.
A former energy trader who spoke to the Mercury News on the condition that he
not be identified, said: ``When you can calculate exactly what a market needs
and where its surplus is going to come from, then you have the ability to
essentially fix prices. It's like a linear equation. You know exactly what
the end equation is going to be.''
At issue are how traders employ the tools that, like the telephone and fax
machine, are standard in trading electricity: software, data Web sites and
Internet energy exchanges.
Dunn and other public officials acknowledge that it isn't clear how
technology was used in suspected abuses. And no one has turned up slam-dunk
evidence of collusion.
The ISO has done extensive studies that conclude traders drove up prices
through gaming. The high prices have cost the state at least $6.7 billion
since May 2000.
``Energy traders trade information among themselves,'' the ISO's Sheffrin
charged, comparing it to insider-trading. ``These traders are calling each
other up all the time.''
The former energy trader who talked to the Mercury News agreed energy traders
as a very incestuous group.
They talk and e-mail every day. ``Sometimes many, many, many times a day,''
he said. ``Some of them have instant messaging.'' He said he believes it
could amount to ``de facto collusion.''
But proving collusion in court is extremely difficult.
The sticking point, said UC's Borenstein, is showing exactly what energy
traders did with the information.
``These guys aren't actually sitting down in a room together,'' Borenstein
said. ``They sort of watched each other and said, `Well, other firms are
keeping capacity out and we will too.'?''
The former energy trader said he doubted that investigators would prove
collusion because traders will cover their tracks. ``They're expunging
hard-drive data as we speak,'' he said. ``The documents are long gone.''
Lawsuits
Two class-action lawsuits, filed on behalf of taxpayers by San Francisco and
by Lt. Gov. Cruz Bustamante, accuse the energy companies of colluding to
drive up prices. Neither lawsuit clearly documents how the energy companies
engaged in secretive data-sharing.
The Bustamante suit, however, targets a new Internet site for wholesale
energy trading launched last fall by heavy-hitter energy companies such as
Duke and Reliant. The Atlanta-based Web site, IntercontinentalExchange, is
one of at least a dozen such electronic trading floors that have popped up on
the Internet in the last four years. None of these trading exchanges -- which
analysts say are the wave of the future -- are regulated.
IntercontinentalExchange declined to comment since it is not a party to the
suit.
The lawsuit charges the site ``has several features that support collusive
behavior amongst market participants.''
One is that only approved traders have access to IntercontinentalExchange and
those traders can pick who they want to trade with and shut other traders
out. And more importantly, Aguirre said, the energy companies who own many of
these Web exchanges get the tremendous benefit of having a record of all the
trades.
``It gives them an enormous amount of market data that no one else has access
to,'' he said. ``It's a conduit for collusion.''

Contact Jennifer Bjorhus at jbjorhus@sjmercury.com or (408) 920-5660.

Davis is down, but history and politics are on his side
Published Monday, June 11, 2001, in the San Jose Mercury News
BY PHIL YOST
THE next time Gray Davis faces the voters is less than nine months away.
Before the March 5 primary election, blackouts could blight the summer,
generators could loot the state, utilities could sink into the ocean, and
Home Depot could run out of batteries.
Already, the energy crisis has made voters crabby. In the latest Field Poll,
49 percent had an unfavorable impression of Davis, as opposed to 44 percent
favorable.
Here, perhaps, is where the battered Republican Party, pinned against its own
goal line, can regain some of the ground lost in the 1998 and 2000 elections.
Perhaps Davis will even be weakened by a challenge from within his own
Democratic Party.
Don't be too hasty.
From January to June, the GOP's prospects undoubtedly thawed. Two candidates
are already looking to take advantage: Bill Jones, California's secretary of
state, and Bill Simon, a Los Angeles businessman and philanthropist.
But here's a bit of history discouraging for the Bills, neither of whom is
recognized by even half the voters in the state. The last California governor
to be denied a second term by the voters was Culbert Olson, in 1943.
Davis will not answer to all the voters in March, only Democratic ones. Court
rulings have eliminated California's short-lived blanket primaries and
restored the partisan contests. So he has two summers before the November
2002 election to get the power puzzle solved.
All the same, politics is an arena in which anything can happen. (Your honor,
I call Jesse Ventura to the stand.) And what Republicans more and more are
hoping will happen is that Los Angeles will send to the governor's office its
departing mayor, Richard Riordan. Riordan says he's thinking about running.
A Field Poll in late May showed Riordan even with Davis in voter preference,
while Jones and Simon trailed by double digits. President Bush has called on
Riordan to run. Last week, 14 Republican legislators, of the 44 in the
Assembly and Senate, and 16 of California's 20 Republican members of Congress
signed a letter urging Riordan to be a candidate.
Given the beaten down state of the Republican party in California, one of
Riordan's advantages for the general election is that he is thought of first
as the mayor of Los Angeles, and only second as a Republican. It's an
accurate picture. He opposed the immigrant-bashing Proposition 187. He
supports gay rights and is generally pro-choice. He has endorsed Democratic
Sen. Dianne Feinstein in the past.
Plenty of Republicans will find plenty to dislike there. But they should get
realistic about what sort of candidate is electable. Socially conservative
Dan Lungren, the GOP candidate in 1998, got pounded. The 2000 election
offered no suggestion that California voters were moving rightward.
Riordan, a very wealthy man, could put $30 million or more of his own money
into the campaign, which is what Davis already has collected. Yet Riordan's
performance as L.A. mayor insulates him from the charge that he is a rich man
playing at politics.
Jones, who is from Fresno, has done a commendable job in his eight years as
secretary of state. But he offended many Republicans by the way in which he
switched from supporting George W. Bush to John McCain in last year's
presidential race. Simon has the money to make himself and his message known,
but right now both are unknown.
Maybe Jones and Simon can make the cases for themselves over the summer and
fall. But Riordan would enter the race with a huge head start.
As for a challenger to Davis from within the party, everything depends on
this summer. Only if it is an ordeal of blackouts and staggering state
electricity bills is Davis in danger. The political taboo against striking at
an incumbent is powerful.
Further, those most likely and able to mount a palace coup -- Attorney
General Bill Lockyer and Treasurer Phil Angelides, to pick two -- would be
the most viable candidates to succeed Davis four years from now. Why would
they risk a suicide mission instead of waiting?
The first half of 2001 damaged Davis's political standing. But in politics,
being down is a long way from being out. And despite the polls, Republicans
should strategize as if they are a long way from the governor's office.

Phil Yost is chief editorial writer of the Mercury News.

Senate panel eyes price caps for power
Lieberman will hold hearings that will include Gov. Davis and U.S.
regulators.
June 11, 2001
By KATE BERRY
The Orange County Register
U.S. Sen. Joseph Lieberman announced Sunday that he will hold hearings
beginning this week on California's electricity crisis aimed at forcing
federal energy regulators to cap power prices in California and throughout
the West.
Gov. Gray Davis will testify before a Senate committee and square off with
Federal Energy Regulatory Commission members at a hearing June 20, Lieberman
said.
Lieberman, who became chairman of the Senate Government Affairs Committee
last week, said he expects federal regulators to agree to impose price caps
under the auspices of a new commission chairman.But if regulators fail to
rein in prices, he is girding for a fight in a divided Congress to pass
legislation that protects California.
"This is going to be a battle, but it's a battle worth fighting," he said.
"President Bush is setting a tone here, a tone of empathy for California's
plight - but inaction."
Davis joined Lieberman on a conference call Sunday and repeated his mantra
that regulators of the Federal Energy Commission have failed to rein in
skyrocketing wholesale prices by imposing a temporary 18-month price cap.
Davis said generators could make a profit of between 30 percent and 50
percent even with the cap in place.
Davis said a temporary price cap would save the state billions. He said 16
new power plants are expected to come online by 2003, when prices are
expected to stabilize. Davis continued to put blame for the crisis on his
Republican predecessor, Pete Wilson, who pushed for the 1996 law that
deregulated wholesale - but not retail - prices in California.
Lieberman, D-Conn., will hold two days of hearings, beginning this week, to
determine if FERC is upholding a 1932 law that ensures wholesale electricity
prices are "just and reasonable."
Lieberman said several economists will testify Wednesday at the first hearing
on California's energy market.
The five members of the Federal Energy Regulatory Commission will testify at
the second hearing June 20 and respond to questions from Davis.
Lieberman ascended to the chairmanship of the Senate Government Affairs
Committee last week, when Sen. James M. Jeffords quit the Republican Party to
become an independent, and control of the Senate switched to the Democrats.
With that change, legislation by Sen. Dianne Feinstein, D-Calif., to force
federal regulators to set price limits will now move forward, Davis said.
U.S. Senate Majority Leader Tom Daschle said Sunday that he also favors price
caps to rein in skyrocketing wholesale power prices in California. Daschle,
who took over as majority leader last week, also said FERC has not lived up
to its responsibility.
FERC Chairman Curt Hebert and President George W. Bush are against such price
caps, arguing they would discourage firms from building new power plants and
do nothing to encourage consumers to use less electricity.
But Hebert is expected to be replaced shortly by Pat Wood, a Republican and
former chairman of the Texas Public Utilities Commission. Wood has said he
will come to California and work with state officials on the crisis, leading
some to believe he may be more likely to favor price caps than his
predecessor.
The chairmanship of the oversight committee gives Lieberman broad power to
subpoena witnesses and records while overseeing the actions of nearly every
government agency.
The hearings also will highlight the difference between Democrats and
Republicans at a time when national polls have shown Bush is vulnerable on
the energy issue.
"If we have to, we'll go forward with the legislation and try to force FERC
to enforce the law, if it's necessary," Lieberman said.
Lieberman warned that California represents 15 percent of the American
economy, and any major downturn in the state would have rippling effects
across the country.
The Associated Press contributed to this report.

New program will pay businesses to conserve
The incentives could save hundreds of megawatts, the governor's staff says.
June 10, 2001
By JOHN HOWARD
The Orange County Register
SACRAMENTO California will pay businesses to conserve if that costs less than
buying power on the open market, under an executive order signed Saturday by
Gov. Gray Davis.
The governor's staff said the new program could save hundreds of megawatts
and cost $50 million to $100 million.
The companies would submit bids to the state, estimating how much it costs
them to reduce their energy consumption. If those amounts are less than the
state would pay for power, the state will pay the companies instead.
The state "would rather pay people in California money to cut back than pay
out-of-state generators," said S. David Freeman, the governor's top energy
adviser.
Perhaps 500 to 900 megawatts could be saved, said Davis adviser Kellan
Fluckiger. He did not say whether the payments would be in cash, credits or
reductions on future bills.
The program will continue through this year and into 2002.
It also was uncertain whether information about the companies' payments would
be available to the public, an issue that is the subject of a legal dispute.
Partial information about the state's energy purchases currently is being
disclosed six months after the fact.
The program will be administered by the Independent System Operator, the
private manager of the state's electricity grid. The money will come from the
state budget through the Department of Water Resources, which has been buying
power for California's credit-lacking utilities since January.
Thus far, the state has set aside about $8.2 billion for electricity
purchases.
A number of other business conservation programs already exist, including one
in which companies enjoy lower rates for agreeing in advance to cut
consumption during peak periods. The latest executive order enhances that
program, Freeman said. "It creates a whole new dynamic," he added.
Other conservation efforts include reductions in outdoor commercial lighting,
and incentives to use energy-efficient appliances and reduce residential
consumption this summer by 20 percent.

Capitol Report
Davis' crisis management on upswing.
June 10, 2001
What electricity crisis?
Gray Davis' public relations juggernaut is cranked up and roaring, spinning
the governor's message that California has "basically won the war" against
tight supplies, spiraling prices and rapacious power companies. Through sound
bites, selective leaks and even more selective financial data, Davis is
driving home the message that lower electricity prices stem from the state's
ability to lock up cheaper energy with long-term contracts.
This is only partly true - all good PR has a kernel of truth - but it's
welcome news indeed for consumers fed up with California's electricity mess.
Cooler weather, conservation, more power plants back in service after repairs
and a drop in natural-gas prices are soothing the market. Those factors, all
temporary, may be as important as the contracts, or even more so.
But it is instructive to watch the governor's newly aggressive, organized
communications strategy. For the first time since his election, the
governor's PR apparatus is efficient and effective. Somebody has been giving
him good advice lately, and he seems to be taking it.
He's everywhere. He pops up repeatedly on network TV news programs, where he
depicts California as the innocent victim of federal inaction. He looks
better on the tube than in person, although he needs to change his clothes -
that red tie and blue shirt are getting old.
He appears in front of power plants, announcing a new initiative amid the
roar of generation. He's more accessible, fields more questions and appears
at more editorial boards. He's gotten away from blaming former Gov. Pete
Wilson for the current mess. His office e-mails favorable news articles to
the press, with a tag saying "in case you missed it." There's no chance
anyone missed it. Reporters are getting four or five copies of the same
release.
But glossed over in the image-polishing of fearless energy crusader are the
double-digit rate hikes that hit consumers this month and the stresses
California's power grid is likely to face with the onset of hot weather. The
public relations machine hasn't quite figured out how to handle those yet.
THE WEEK TO COME
Fighting over money is a hallowed Capitol tradition. The question of what to
spend, and when, is the crux of the budget battle. But this year's $102.9
billion budget war is oddly different.
The Legislature's budget writers are fighting over what not to spend. They
are wrangling over how much to hold back, rather than how much to commit.
The governor wants a razor-thin, $1 billion rainy-day fund, because he needs
as much cash as possible to balance the state's books. But that reserve is
too small, some on the budget committee believe, and should be doubled or
even tripled.
Until the reserve is established, it's hard to decide the rest of the
spending. That hasn't stopped the budget committee, which is pressing on even
though the rainy-day fund is a mystery. "This is a departure from tradition,"
said an exasperated Sen. Steve Peace, D-El Cajon.
He's right.

Energy notebook
Officials: Suppliers should refund excess charges
June 9, 2001
From Register news services
SACRAMENTO Four major power suppliers to California have shown they can
control prices in the wholesale electricity market and should have to refund
excess charges, possibly up to billions of dollars, state grid officials said
Friday.
The Independent System Operator, keeper of the state's power grid, also asked
the Federal Energy Regulatory Commission to revoke the market-based rate
authority for four generators -- Duke Energy, Mirant, Dynegy and Reliant
Energy.
ISO analysts have estimated the state was overcharged about $6.7 billion
between May 2000 and March 2001. That includes charges by generators other
than the four in these filings, and ISO officials didn't have an estimate on
how much they were seeking from Duke, Reliant, Mirant and Dynegy.
In order to escape charging cost-based rates, generators must prove to FERC
that they don't have market power -- the ability to charge whatever price
they want without consequence. Suppliers have to have that authority renewed
by FERC every three years, and most are up for review this summer.
The ISO last month made a similar request of FERC for power sold by Williams
Cos. and AES Corp.
Utilities may lower voltage provided to homes, firms
SAN FRANCISCO California utilities are considering lowering the voltage of
electricity delivered to businesses and homes in order to save megawatts.
If successful, such a program could save the state millions of dollars and
lower power demand, possibly avoiding some rolling blackouts, energy experts
said.
The sticking points for state power regulators are potential damage to
appliances and the loss of some profit to utilities, which would sell less
electricity.
Home appliances, computers and other equipment are normally rated to run best
at about 115 volts. If voltage is dropped too low - experts say lower than
110 volts - motors can overheat, damaging appliances.
Under the plan, the three utilities would reduce the voltage delivered to
businesses and homes from the present level of 120 volts to 118 or 116 volts.
A drop so slight would not damage appliances and could dim some lights, but
it could cut power usage between 400 and 1,000 megawatts of electricity.
That's enough electricity to power up to 750,000 homes - or the equivalent of
building a new power plant.
Edison 'disappointed' with lack of progress on bailout
ROSEMEAD Southern California Edison officials are "frankly disappointed" with
the lack of progress state regulators have made on the utility's bailout
package, an Edison International executive said.
Friday was the deadline for the California Public Utilities Commission to act
on five elements of the bailout pact Edison made with Gov. Gray Davis two
months ago. The agency put some of the items on its agenda for next
Thursday's meeting.
The longer Edison goes without a financial rescue, the greater the risk that
creditors will lose patience and force the parent or its utility into
bankruptcy. Despite the commission's failure to act, Edison officials aren't
planning to exercise their option to terminate the rescue, said Ted Craver,
Edison's chief financial officer. The governor has the same option.
In other news:
Gov. Gray Davis asked state regulators to exempt oil refineries from
electricity blackouts, saying the threat of power outages may lead to
production cuts and higher energy prices. Chevron Corp., the largest supplier
of California's unique blend of gasoline, told Davis this week it would be
forced to reduce refinery output without guarantees of uninterrupted power,
causing fuel shortages. A drop in supplies may boost gasoline-pump prices in
California, which already are more than $2 per gallon.
Calpine Corp., a U.S. electricity generator and power-plant developer, plans
to build a $325 million power plant in southwest Riverside County able to
produce enough power to light about 450,000 California homes. The project,
Calpine's 10th major power development for the California market, is
scheduled to begin construction in mid-2002 and open in late 2004. The
proposed Inland Empire Energy Center will produce about 600 megawatts of
power that will go to the power grid of Southern California Edison. The
gas-powered plant will serve the growing suburban areas of Riverside and San
Bernardino counties.
Bloomberg News and the Associated Press contributed to this report.

Calpine Announces 600-MW Inland Empire Energy Center Project Will Offer
Electricity to One of California's Fastest Growing Regions

June 11, 2001

Project Will Offer Electricity to One of California's Fastest Growing Regions
SAN JOSE, Calif., June 8 /PRNewswire/ -- Calpine Corporation (NYSE: CPN), a
leading independent power producer, announced plans to build, own, and
operate a 600-megawatt electric generating facility to be located in
southwestern Riverside County, California. The proposed Inland Empire Energy
Center will feed directly into Southern California Edison's power grid and is
intended to serve the rapidly growing counties of Riverside and San
Bernardino. Construction of the $325 million facility is scheduled to begin
in mid-2002, with commercial operation targeted for late 2004.
The facility will use two advanced technology General Electric combustion
turbines in combined-cycle with a single steam turbine and will be fueled by
natural gas. With its advanced emissions control system and configuration,
the Inland Empire Energy Center will be significantly cleaner and more fuel
efficient than the typical natural gas-fired power plant operating today.
"As a California-based company, we are extremely pleased to, yet again, move
forward on a project such as this," said Calpine's Senior Vice President of
Business Development, John King. "To date, Calpine has committed
approximately $6 billion to the California energy market. With this
industry-leading initiative to bring more than 12,000 megawatts of new
generation to California, we believe Calpine has taken a significant step
towards helping put an end to the 'energy crisis.'"
Calpine will manage all aspects of project development for the Inland Empire
Energy Center, including engineering and design, construction, and
operations. The project will interconnect to the local power grid via
existing transmission lines adjacent to the site and will be fueled by a
major gas line already serving the region.
"This project represents a cost-effective, near-term means for the Inland
Empire to satisfy part of its power needs with locally produced electricity,"
added King. "The facility's location and design provides not only heightened
energy independence and diversity for the region, but reliable access to the
clean and affordable electricity we all require."
Construction of the Inland Empire Energy Center will require as many as 300
workers. Upon completion, 20 to 25 skilled power professionals with a
combined annual payroll in excess of $1 million will operate the facility. In
addition to providing a clean, affordable, and reliable source of new, local
power generation and a means for accelerating regional economic development,
the facility also will emerge as one of the leading sources of tax revenue
for Riverside County.
The Inland Empire Energy Center is Calpine's tenth announced major power
project being developed specifically for the California market. Already,
Calpine has three California projects under construction, with the Sutter and
Los Medanos Energy Centers scheduled to begin operation this month. The two
projects' combined 1,100-plus megawatt output represents the only large-scale
power facilities coming online this summer in the state. The third Calpine
project under construction, the 880-megawatt Delta Energy Center, is slated
to be complete within a year. In total, Calpine has more than 8,100 megawatts
of generation already in operation, construction, or announced development in
California.
Based in San Jose, Calif., Calpine Corporation is dedicated to providing
customers with reliable and competitively priced electricity. Calpine is
focused on clean, efficient, natural gas-fired generation and is the world's
largest producer of renewable geothermal energy. Calpine has launched the
largest power development program in North America. To date, the company has
approximately 32,600 megawatts of base load capacity and 7,200 megawatts of
peaking capacity in operation, under construction and in announced
development in 29 states and Canada. The company was founded in 1984 and is
publicly traded on the New York Stock Exchange under the symbol CPN. For more
information about Calpine, visit its Website at www.calpine.com.
This news release discusses certain matters that may be considered
"forward-looking" statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, including statements regarding the intent,
belief or current expectations of Calpine Corporation ("the Company") and its
management. Prospective investors are cautioned that any such forward-looking
statements are not guarantees of future performance and involve a number of
risks and uncertainties that could materially affect actual results such as,
but not limited to, (i) changes in government regulations, including pending
changes in California, and anticipated deregulation of the electric energy
industry, (ii) commercial operations of new plants that may be delayed or
prevented because of various development and construction risks, such as a
failure to obtain financing and the necessary permits to operate or the
failure of third-party contractors to perform their contractual obligations,
(iii) cost estimates are preliminary and actual cost may be higher than
estimated, (iv) the assurance that the Company will develop additional
plants, (v) a competitor's development of a lower-cost generating gas-fired
power plant, and (vi) the risks associated with marketing and selling power
from power plants in the newly competitive energy market. Prospective
investors are also cautioned that the California energy environment remains
uncertain. The Company's management is working closely with a number of
parties to resolve the current uncertainty, while protecting the Company's
interests. Management believes that a final resolution will not have a
material adverse impact on the Company. Prospective investors are also
referred to the other risks identified from time to time in the Company's
reports and registration statements filed with the Securities and Exchange
Commission.
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SOURCE Calpine Corporation
CONTACT: media, Kent Robertson, 925-600-2317, or investors, Rick Barraza,
408-995-5115, ext. 1125, both of Calpine Corporation
Web site: http://www.calpine.com (CPN)

SDG&E Applauds Expansion of Assistance For Low-Income Customers; CPUC Changes
Mean More Eligible Customers, Increased Discounts

June 11, 2001

SAN DIEGO, June 8 /PRNewswire/ via NewsEdge Corporation -
San Diego Gas & Electric (SDG&E) officials today applauded actions by the
California Public Utilities Commission (CPUC) to increase discounts and
expand eligibility standards for the limited-income utility customers to
participate in the California Alternate Rates for Energy (CARE) rate-discount
program.
The new standard will make an additional 70,000 customers eligible for the
program and will increase the discount on customers' bills to 20 percent from
15 percent. Approximately 147,000 SDG&E customers currently are enrolled in
the CARE program.
"We support the CPUC's actions to increase the availability of assistance
through the CARE program, because we are concerned about the impact of higher
electricity costs on our community, especially on our low-income customers,"
said Pamela J. Fair, vice president of customer services for SDG&E. "The
increased availability and enhanced benefit of the CARE program, in addition
to our more aggressive outreach programs, will bring welcome financial help
to many more customers."
The CPUC yesterday also increased the eligibility guidelines to include
customers with income at or less than 175 percent of federal poverty
guidelines.
The new annual limits are:
Household of 1 or 2 $22,000
Household of 3 $25,900
Household of 4 $31,100
Each additional person Add $5,200
Fair said that, over the past several months, SDG&E has significantly
increased its outreach efforts to lower-income customers, including:
-- The free exchange of more than 9,000 lightbulbs for more
energy-efficient bulbs at some 30 events held for seniors and
low-income customers this year.
-- Increased communications to customers concerning low-income
assistance, including billing informational inserts, advertising, news
releases and kiosk displays in shopping malls.
-- More aggressive outreach through SDG&E's low-income energy efficiency
programs, which will provide free education and energy-efficiency
measures to an estimated 40,000 customers this year. SDG&E also
recently expanded its notification system concerning the availability
of low-income assistance to include 5,600 mobile-home-park operators.
-- Partnerships with community-based organizations to conduct a series of
presentations throughout the region on low-income assistance and
energy-efficiency programs in Spanish, Vietnamese, Laotian, Russian
and several Middle Eastern, African and Eastern European languages.
The company expects to reach an additional 30,000 customers through
this program in 2001, up from 20,000 last year.
"We want our customers in need to be aware of the help that's available to
them in the form of direct assistance, energy-efficiency upgrades and
flexible payment options," Fair said. "We are spreading the word about these
options through a broad range of channels."
SDG&E resumed collection activities earlier this year after a six-month
moratorium, and its disconnection activities are now approaching its average
historical levels, Fair said. For the first five months of 2001, there were
5,582 disconnections, compared to 9,290 during the same period last year and
11,583 in the first five months of 1999. The total disconnection rate for
2001 represents less than one-half of 1 percent of SDG&E's 1.2 million
customers.
SDG&E is encouraging any customers who receive late-payment notices to call
SDG&E at (800) 411-SDGE to set up payment arrangements. SDG&E has in place a
successful program of working with customers to set up flexible payment plans
and to refer qualified customers to bill-assistance resources, Fair said.
San Diego Gas & Electric is a regulated utility that provides service to 3
million consumers through 1.2 million electric meters and 740,000 natural gas
meters in San Diego and southern Orange counties. SDG&E is a subsidiary of
Sempra Energy (NYSE: SRE), a Fortune 500 energy services holding company
based in San Diego.
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SOURCE San Diego Gas & Electric
CONTACT: Ed Van Herik of San Diego Gas & Electric, 877-866-2066
Web site: http://www.sdge.com (SRE)

Business/Financial Desk; Section C
California Gets a Reprieve As Natural Gas Prices Drop
By RICHARD A. OPPEL Jr.
?
06/11/2001
The New York Times
Page 2, Column 5
c. 2001 New York Times Company
DALLAS, June 10 -- The price of natural gas sold into Southern California has
fallen sharply the last week after both the free fall in electricity prices
and the expiration of a pipeline contract held by the El Paso Corporation
that is the subject of an inquiry by federal regulators.
The change in prices has prompted critics of El Paso to suggest that the drop
shows how much effect the company's contract had in keeping natural gas
prices high.
But a lawyer for the company says that while gas prices in Southern
California are lower than in recent months, they are mostly still higher than
in other parts of the country. And he said the decline that has taken place
was largely because of the factors that have caused California electricity
prices to plunge unexpectedly since late last month.
Whatever the reason, lower gas prices, if they continue, bode well for
California electricity rate payers because gas is a crucial fuel for
generating electricity . But California officials have said the drop in gas
prices may prove short-lived, just as many experts think the state's lower
electricity prices may be temporary.
Analysts have said the steep run-up in gas prices that began last year was
caused by factors like soaring demand from electricity generators, a shortage
of pipeline capacity and market rules in California that did not require
companies to store enough gas for winter.
The California Public Utilities Commission and Southern California Edison
have also contended that El Paso used its contractual control of a large
amount of pipeline space into California to curtail gas flows so it could
drive prices higher. El Paso denies that, saying California is trying to make
the company a scapegoat for its failed energy policies. An administrative
judge is hearing the accusations at the Federal Energy Regulatory Commission
in Washington.
The contract at issue expired May 31, and control of the pipeline space was
then transferred to 30 different companies. According to Natural Gas
Intelligence, an industry publication, the average price for gas in Southern
California during ''bidweek'' -- the process in the last seven days of the
month that determines the price for much of the gas sold the next month --
was $11.70 per million British thermal units, or nearly triple the prices in
the rest of the nation. But by late last week, daily prices for gas had
dropped to about $4 to some Southern California destinations.
''It reflects that the market's recognition that the capacity is no longer
held by one major player, and I think the market knows the difference between
competition and a monopoly,'' said Kevin J. Lipson, a lawyer for Southern
California Edison. ''It reflects the benefits of competition.''
But, a lawyer for El Paso, William S. Scherman, said the expiration of the
contract has not affected prices.
''Looking at prices on a daily basis is invalid,'' Mr. Scherman said, because
most gas sold is priced on a month-to-month basis.
''Prices may be coming down because of supply and demand and other
conditions, but they are still showing a significant scarcity rent,'' he
said, meaning that the cost for transporting gas is still higher in Southern
California than in other places.