IEP News 5/11Today's IEP news...

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Jean

AP Online, May 10, 2001; Thursday, 11:03 PM, Eastern Time, Domestic,
????non-Washington, general news item, 385 words, Calif. Governor Signs Power
????Bill, DON THOMPSON, SACRAMENTO

Contra Costa Times, May 11, 2001, Friday, STATE AND REGIONAL NEWS, K0934,
????882 words, Colossal bond sale has big ifs, By Mike Taugher and Rick
Jurgens

Contra Costa Times, May 11, 2001, Friday, CC-ENERGY, 540 words, Energy
????Generators Plea to Quit California Electric Firm's Contracts, By Matt
????Sebastian

Copley News Service, May 11, 2001, Friday, State and regional, 850 words,
????Davis raps GOP foes of power bond, Ed Mendel, SACRAMENTO

THE ELECTRICITY DAILY, May 11, 2001, Friday, Vol. 16, No. 91, 440 words,
????California Crisis Reaches $22 Billion and Still Climbing

Los Angeles Times, May 11, 2001 Friday, Home Edition, Page 17, 713 words,
????Commentary; ; Don't Write Off Davis Energy Plan, ALAN BLINDER, Alan
Blinder,
????a professor of economics at Princeton University, was, vice chairman of
the
????Federal Reserve from 1994-96. He is the senior, advisor to Saber Partners,
????which is advising Gov. Gray Davis on energy, policy

Los Angeles Times, May 11, 2001 Friday, Home Edition, Page 26, 1200 words,
????THE ENERGY CRISIS; NEWS ANALYSIS; Bush, Rivals Don't Dare Ask Public to
Make
????Sacrifices in Energy Crunch, RONALD BROWNSTEIN, TIMES POLITICAL WRITER,
????WASHINGTON

Los Angeles Times, May 11, 2001 Friday, Home Edition, Page 26, 927 words,
????THE ENERGY CRISIS; ; House Committee Rejects Electricity Price Controls;
????Strategy: In a blow to California's governor, Congress signals it won't
rein
????in soaring costs., GREG MILLER, RICHARD SIMON, TIMES STAFF WRITERS,
????WASHINGTON

Los Angeles Times, May 11, 2001 Friday, Home Edition, Page 1, 1646 words,
????THE ENERGY CRISIS; NEWS ANALYSIS; Power Rescue Plan Rests on Many 'Ifs',
????NANCY VOGEL, RICH CONNELL, ROBERT J. LOPEZ, TIMES STAFF WRITERS

Los Angeles Times, May 11, 2001 Friday, Orange County Edition, Page 1, 924
????words, Orange County; ; Restarting of 2 Generators in O.C. OKd; Energy:
????State panel grants a 10-year run for the AES Corp. units despite concerns
of
????Huntington Beach officials and residents., JENIFER WARREN, TIMES STAFF
????WRITER, SACRAMENTO

The New York Times, May 11, 2001, Friday, Late Edition - Final, Section A;
????Page 30; Column 4; National Desk, 672 words, House Moving to Ease
California
????Power Crisis, By PHILIP SHENON, WASHINGTON, May 10

The New York Times, May 11, 2001, Friday, Late Edition - Final, Section C;
????Page 1; Column 2; Business/Financial Desk, 1819 words, A Conservation
????Countdown, By BARBARA WHITAKER, LOS ANGELES, May 9

San Jose Mercury News, May 11, 2001, Friday, STATE AND REGIONAL NEWS, K0884
????, 669 words, House panel votes down price cap legislation, By Jim
????Puzzanghera

The San Francisco Chronicle, MAY 11, 2001, FRIDAY,, FINAL EDITION, NEWS;,
????Pg. A19, 638 words, GOP members of House oppose price cap plan; ???Three
????from Southern California vote against Feinstein on electricity, Carolyn
????Lochhead, Washington

The San Francisco Chronicle, MAY 11, 2001, FRIDAY,, FINAL EDITION, NEWS;,
????Pg. A19, 525 words, PUC chief's proposal called petulant; ???Federal
????agencies would pay full tab for power, Zachary Coile

The San Francisco Chronicle, MAY 11, 2001, FRIDAY,, FINAL EDITION, NEWS;,
????Pg. A1, 812 words, High bills may not spur conservation; ???PG&E, critics
????agree increases are too small to change habits, David Lazarus

The Associated Press State & Local Wire, May 11, 2001, Friday, BC cycle,
????8:46 AM Eastern Time, State and Regional, 731 words, Energy task force
????expected to recommend tax breaks, By H. JOSEF HEBERT, Associated Press
????Writer, WASHINGTON

AP Online, May 10, 2001; Thursday, Domestic, non-Washington, general news
????item, 678 words, California Blackout Season Begins, JENNIFER COLEMAN,
????SACRAMENTO, Calif.

AP Online, May 10, 2001; Thursday, Washington - general news, 703 words,
????Bush Panel to Urge Relaxed Air Rules, H. JOSEF HEBERT, WASHINGTON

AP Online, May 10, 2001; Thursday, Washington - general news, 372 words,
????House Addresses California Crisis, H. JOSEF HEBERT, WASHINGTON

The Associated Press, May 10, 2001, Thursday, BC cycle, Domestic News;
????Business News, 355 words, Calif. governor signs bill authorizing $13.4 in
????bonds to repay treasury for power buying, By DON THOMPSON, Associated
Press
????Writer, SACRAMENTO

The Associated Press State & Local Wire, May 10, 2001, Thursday, BC cycle,
????State and Regional, 467 words, PG&E says fewer small power plants offline,
????By KAREN GAUDETTE, Associated Press Writer, SAN FRANCISCO

The Associated Press State & Local Wire, May 10, 2001, Thursday, BC cycle,
????State and Regional, 570 words, Governor signs bill authorizing $13.4 in
????bonds to repay treasury, By DON THOMPSON, Associated Press Writer,
????SACRAMENTO, California

The Associated Press State & Local Wire, May 10, 2001, Thursday, BC cycle,
????State and Regional, 754 words, Developments in California's energy crisis,
????By The Associated Press

CBS News Transcripts, CBS EVENING NEWS (6:30 PM ET), May 10, 2001, Thursday
????, 398 words, CALIFORNIA BUSINESSES SUFFERING UNDER RATE INCREASES AND
????ROLLING BLACKOUTS, DAN RATHER, JERRY BOWEN

?Copyright 2001 Associated Press

??????????????????????????????????AP Online

????????????????May 10, 2001; Thursday 11:03 PM, Eastern Time

SECTION: Domestic, non-Washington, general news item

LENGTH: 385 words

HEADLINE: ?Calif. Governor Signs Power Bill

BYLINE: DON THOMPSON

DATELINE: SACRAMENTO

BODY:

???Gov. Gray Davis signed a law Thursday letting the state borrow $13.4
billion
to pay for electricity for three cash-starved utilities.

??Davis couldn't guarantee the 15-year bond will be enough to cover the
state's
electricity purchases. But he said the $13.4 billion price tag represents
''the
best thinking of our financial analysts,'' and includes a reserve in case
electricity prices remain higher than expected.

??The state spent $1,900 per megawatt hour Wednesday as state grid operators
narrowly avoided a third consecutive day of blackouts, Davis said, reiterating
his call for federal price caps. Cooler weather helped the state avoid
blackouts
Thursday.

??Wednesday's costs were a record or near-record since the state purchases
began in January, said Oscar Hidalgo, a spokesman for the power-buying
Department of Water Resources.

??Davis said he hopes the state can stop buying power for Pacific Gas and
Electric, Southern California Edison and San Diego Gas and Electric by the end
of next year.

??Davis accused Assembly Republicans of putting their political opposition
above the state's welfare by refusing to support the bond bill. That means the
bonds can't be issued for three months, which Davis said will drive up the
interest ratepayers will be charged for the bond.

??''This measure is a lifeboat that allows us to stay afloat,'' he said.

??In a statement, Assembly GOP Leader Dave Cox called the bond bill ''a
dangerous gamble for California a gamble Republicans couldn't support without
a
clear endgame ... The governor obviously believes that history will judge that
his was the right decision. He had better be right.''

??Also Thursday, a federal bankruptcy judge considered ordering PG&E to make
millions of dollars in back payments to small power plant owners that provide
nearly a third of California's electricity.

??And California power regulators continued struggling over how to divide
record electric rate increases among the 9 million customers of the state's
two
largest utilities, Edison and PG&E. The Public

??tilities Commission is rushing to adopt the higher rates Monday.

?????(PROFILE

?????(CO:Pacific Gas and Electric; TS:PCG; IG:ELC;)

?????(CO:Southern California Edison Co.; TS:SCE;)

?????(CO:Sempra Energy; TS:SRE; IG:ELC;)

?????)

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??????????????Copyright 2001 Knight Ridder/Tribune News Service
???????????????????????Knight Ridder/Tribune News Service

??????????????????????????????Contra Costa Times

?????????????????????????????May 11, 2001, Friday

SECTION: STATE AND REGIONAL NEWS

KR-ACC-NO: ?K0934

LENGTH: 882 words

HEADLINE: Colossal bond sale has big ifs

BYLINE: By Mike Taugher and Rick Jurgens

BODY:

??WALNUT CREEK, Calif. _ Gov. Gray Davis gave the go-ahead to the largest
municipal bond sale in U.S. history on Thursday amid questions about whether
it
would be enough to extricate the state from its energy mess.

??Davis aides said the bond issue, which could go as high as $13.4 billion,
would be enough to finance high electricity prices over the next 18 months.
But
the state already has spent nearly $6 billion of that money during the past
four
months and at its current rate could end up spending $10 billion of taxpayer
money before it can sell any bonds to investors beginning in August.

??But under an intricate plan designed by Davis and his advisers, the governor
says electricity costs will begin to drop dramatically in coming weeks and
months. The plan relies heavily on Californians to conserve electricity, and
assumes, among other things, that Southern California Edison stays out of
bankruptcy and that small, alternative energy firms will restart generating
units.

??"Do a number of things need to come to be? Yes. Absolutely," said Joseph
Fichera, a financial adviser to the governor.

??If the plan's assumptions hold true, it should be unnecessary for the state
to impose new electricity rate hikes or borrow even more money on the bond
market, according to Davis aides.

??But critics, including Republican lawmakers and consumer advocates,
questioned whether those assumptions were realistic and condemned the decision
to borrow so much money as tantamount to a "blank check" to be backed by the
customers of the state's three largest electric utilities.

??"This is not the end, by any means, of the energy spending," said Jamie
Fisfis, spokesman for Assembly Republicans. "There's no part of this that is
tied to an energy plan that has any credibility with anybody."

??Republicans opposed the bond issue and prevented Davis from getting the
two-thirds majority he needed to issue the bonds immediately. Now, the
governor
will have to wait three months, a development that could allow generators who
have signed long-term electricity contracts to back out of those contracts or
increase the price California must pay until the bonds are issued.

??That is because some of those contracts have provisions that allow
generators
to renegotiate with the state if bonds are not sold by a certain date.

??"We are at risk," Fichera said.

??The billions of dollars California borrows from investors will be used to
repay taxpayers for electricity purchases since January and to soften the blow
that extremely high wholesale prices would otherwise pose for customers of
Pacific Gas & Electric, Southern California Edison and San Diego Gas &
Electric.

??Investors who buy the bonds will be repaid through electric bills over the
next 15 years.

??Among assumptions included in an analysis of the deal prepared by Davis'
advisers are expectations that Californians will reduce electricity
consumption
and that the average spot market price for electricity will drop to $230 per
megawatt-hour during the entire year of 2001 and drop to $185 next year. As
long-term contracts and conservation begin to take effect, the state will have
to buy less electricity on the spot market and prices will fall, the
governor's
team says.

??By contrast, prices have been much higher than what the governor's plan
forecasts. The average price on the California spot market during the first
three months of the year was $346.

??Davis also singled out Reliant Energy of Houston for criticism on Thursday,
saying the company charged Californians nearly $2,000 per megawatt-hour for a
relatively small amount of power as grid managers were trying to avoid
blackouts
a day earlier.

??"That is an example of the extraordinary problem that we're dealing with,"
Davis said. "There is a huge transfer of wealth from California to Texas and
other parts of the Southwest."

??The final bond deal will need to include a financial plan that generates
enough revenue for the state Department of Water Resources to fund its power
buys and make payments to bond holders, said Ray Murphy, an analyst for
Moody's
Investor Services, a credit rating agency.

??The utilities could complicate those plans if they mount legal challenges to
how state regulators divert utility customer payments to the state. PG&E and
Edison already have objected to preliminary decisions by the Public Utilities
Commission that pave the way for the commission to send money to the state
that
the utilities contend they are owed.

??Another risk looms in the background.

??Because the money will be collected from electricity users by the state's
utilities, including bankrupt PG&E, there is at least a danger that some
creative lawyer for the utility's creditors will try to have a portion of the
revenue diverted into the company's bankruptcy estate _ the pot of assets to
be
divided up to pay off PG&E's debts.

??That probably won't happen.

??"It is believed that PG&E does not have any claim to the revenue that is
collected," said Murphy, the Moody's analyst.

??Still, he noted that the bankruptcy judge has not ruled on that question.

??KRT CALIFORNIA is a premium service of Knight Ridder/Tribune

??(c) 2001, Contra Costa Times (Walnut Creek, Calif.).

??Visit the Contra Costa Times on the Web at http://www.cctimes.com/

JOURNAL-CODE: CC

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??????????????????????????????9 of 106 DOCUMENTS

??????????????Copyright 2001 Knight Ridder/Tribune Business News
???????????????????????Copyright 2001 Contra Costa Times

??????????????????????????????Contra Costa Times

?????????????????????????????May 11, 2001, Friday

KR-ACC-NO: CC-ENERGY

LENGTH: 540 words

HEADLINE: Energy Generators Plea to Quit California Electric Firm's Contracts

BYLINE: By Matt Sebastian

BODY:

??SAN FRANCISCO--Alternative energy generators warned a federal judge Thursday
that Californians could be in for more dark days this summer if they're not
freed from unfavorable contracts with bankrupt Pacific Gas & Electric Co.

??A group of four gas-fired co-generation facilities in the San Joaquin Valley
asked Judge Dennis Montali to cancel their contracts with the utility, saying
the utility owes them $ 58 million in pre-bankruptcy payments.

??The generators' attorneys and lawyers for several other firms with similar
cases before the U.S. Bankruptcy Court warned that the power companies could
start shutting down again if they're not allowed to sell their electricity at
higher rates on the open market.

??Two days of blackouts in March were blamed, in part, on the high number of
alternative generators, known as qualifying facilities, that went off-line
because they hadn't been paid. More than 300 QFs say they're owed nearly $ 1
billion by PG&E.

??"At this date and time, the state of California needs every megawatt it can
get," said attorney Richard Lapping, who represents Calpine Corp., which PG&E
owes $ 267 million for energy produced by its QFs.

??Because natural gas prices are so high and the price PG&E pays the
generators
for energy is so low under the contracts, the power companies argue they could
go bankrupt as well if they're not soon granted relief.

??Attorneys for the generators told the judge that PG&E saves $ 284 million a
month by buying 2,500 megawatts of electricity -- enough to power 2.5 million
homes -- from QFs rather than buying it on the volatile market.

??"If the stay's not lifted and we're paid a rate that doesn't cover our costs
we will financially fail," Bruce Leaverton, an attorney representing the San
Joaquin Valley plants, told Montali.

??The judge grilled both sides, pointing out that the generators would still
be
trapped in unfavorable contracts had PG&E not declared bankruptcy. "Isn't that
the risk you bargained for?" Montali asked.

??But he also questioned why PG&E insists on waiting months to decide whether
to keep or drop the QF contracts. That decision usually doesn't happen until a
bankrupt company files its reorganization plan.

??The bankrupt utility, for its part, questioned the failing fiscal health of
the San Joaquin Valley generators, pointing out that they're half-owned by
Texaco.

??"It's not a little guy who's about to go out of business," said Jim Lopes,
PG&E's lead bankruptcy counsel. "It's a big guy that doesn't like the terms of
his contract."

??"I don't think we want to get into parentage," Montali quipped, referring to
accusations that PG&E's parent company, PG&E Corp., is profiting during the
utility's bankruptcy.

??Montali delayed ruling on the QFs' motion until later this month in order to
give PG&E's attorneys time to respond to a last-minute motion filed by the
generators.

??The judge may weigh in on the topic sooner than that, though, as more than a
dozen other alternative energy producers line up in similar attempts to drop
their contracts. Two such hearings are scheduled for next week.

??-----

??To see more of the Contra Costa Times, or to subscribe to the newspaper, go
to http://www.hotcoco.com/

JOURNAL-CODE: CC

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?????????????????????????????10 of 106 DOCUMENTS

??????????????????????Copyright 2001 Copley News Service

?????????????????????????????Copley News Service

?????????????????????????????May 11, 2001, Friday

SECTION: State and regional

LENGTH: 850 words

HEADLINE: Davis raps GOP foes of power bond

BYLINE: Ed Mendel

DATELINE: SACRAMENTO

BODY:

??Gov. Gray Davis attacked Republicans yesterday as he signed a record $13.4
billion bond to repay the state general fund for power purchases, warning that
their opposition could harm the state budget and the California economy.

??Davis threatened to travel to the districts of Republican legislators and
spell out how law enforcement, transportation, health care, education, and
senior programs may have to be cut because the bond money will not be
available
until August.

??The governor also criticized three Republicans in Congress for voting
against
a proposal in committee yesterday to impose tighter federal controls on
wholesale power prices.

??Assembly GOP Leader Dave Cox of Fair Oaks predicted that Davis soon ''will
be
visiting up and down the state trying to get re-elected, that is why he using
fear politics, the blame game.''

??The open partisan warfare erupted as Davis reported the incredibly high
price
the state paid for electricity Wednesday to avoid blackouts.

??A spokesman for the state Department of Water Resources, which buys power on
behalf of the utilities, said the state paid Houston-based Reliant Energy Inc.
$1,900 per megawatt-hour for 168 megawatt-hours, costing a total of $319,200.

??''If it's not a record, it's very close to it,'' said Oscar Hidalgo, a
department spokesman. ''No one can recall anything higher. But we haven't
delved
into all of the history.''

??Hidalgo said the state purchased 300,000 megawatt-hours of electricity
Wednesday. The state has previously reported spending as much as $90 million a
day to buy power, but the total that the state spent for power on Wednesday
was
not available.

??Davis has declined to reveal details of state spending for power, arguing
that generators would use the information to submit higher bids. Republican
legislators and a group of newspapers have filed lawsuits to force the state
to
release the information.

??The state has been revealing rough totals of the power spending by
periodically notifying the Legislature that a $500 million increment will be
spent in 10 days.

??On Monday, the Department of Finance notified the Legislature that the state
will begin spending another $500 million increment in 10 days. By that time,
the
state expects to have spent more than $6.7 billion buying power.

??The total includes $5.9 billion from the general fund, $302 million from the
state Department of Water Resources budget, and about $545 million received
from
investor-owned utilities whose customers receive the power purchased by the
state.

??The state began buying power for utility customers in January after Pacific
Gas and Electric and Southern California Edison, whose rates were frozen under
deregulation as wholesale power costs soared, ran up a combined debt of about
$13 billion and could no longer borrow.

??The $13.4 billion bond authorization signed by Davis yesterday is intended
to
repay the state general fund and provide some additional money for long-term
power contracts.

??Republicans refused to provide the two-thirds vote needed for an urgency
measure allowing the bonds to be sold before the new state fiscal year begins
July 1. Assembly Republicans wanted a smaller, $8 billion bond, lowering
future
bills for ratepayers who will pay off the bonds over 15 years.

??''I want people to understand that we are going to have to pare back
important programs in our budget since we won't have the cash on July 1,''
Davis
said. ''We will have the cash, best case, mid- to late August.''

??The Assembly GOP leader, Cox, said a bipartisan deal on a bond could have
been reached if the governor and Democratic legislators had responded to the
Republican proposal and tried to negotiate an agreement.

??Davis is scheduled to propose a revised budget Monday.

??Meanwhile, a group of San Diego County businessmen said yesterday they plan
to ask county government to finance the purchase of 25 diesel generators,
capable of generating 2 megawatts apiece, to operate at large businesses that
don't have emergency generators.

??Robert L. Simmons II, leader of the Coalition for Electricity Independence,
said the program could provide 50 megawatts of new generation by this summer
and
reduce the need for blackouts in San Diego County by cutting demand on the
grid.

??Simmons is seeking $15 million in funding from the county Board of
Supervisors to finance acquisition of the equipment. Private funds also are
being raised, he said.

??''We are asking our leaders to step up to the plate with action,'' said
Simmons, chief executive of Senior Aerospace Ketema in El Cajon, who said his
company would be willing to use one of the portable generators.

??San Diego Gas & Electric last week announced a similar proposal. The company
wants businesses with existing generators to sign contracts agreeing to turn
them on and drop off the power grid when the region is in a power emergency.
Officials say that plan, which requires state Public Utilities Commission
approval, could provide 50 megawatts.

Staff writer Karen Kucher contributed to this report.

??WAGNER-CNS-SD-05-10-01 2221PST

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?????????????????????????????11 of 106 DOCUMENTS

???????????????????????Copyright 2001 Elsevier Science

????????????????????????????THE ELECTRICITY DAILY

?????????????????????????????May 11, 2001, Friday

SECTION: Vol. 16, No. 91

LENGTH: 440 words

HEADLINE: California Crisis Reaches $22 Billion and Still Climbing

BODY:

??Forecasts of the economic impact of California s power crisis continue to
climb, with the latest business-backed study claiming $22 billion of lost
productivity if California Independent System Operator projections of 100
hours
of blackouts are accurate. The ISO forecast also translates to statewide
household income reductions of $4.5 billion and job losses of 135,000,
according
to the study by the high-tech heavy California Manufacturers & Technology
Association(CMTA) and other business groups.

??Each time electricity prices are hiked -- particularly if business is the
target -- damage from the blackouts is multiplied, said CMTA president Jack
Stewart. Part of the underlying motivation for the study is clearly a move to
"implement an equitable rate increase structure that encourages greater
conservation by residential and business users alike," Stewart said. ?The CMTA
study comes on the heels of work by AUS Consultants of New Jersey, a market
research firm, which concluded just last month the crisis would cause some $16
billion of lost productivity statewide. ?Against that backdrop, California
Gov.
Gray Davis is publicly claiming that independent generators such as Dynegy,
Reliant Energy, Mirant, and others are "making more money than God" and
sucking
the cash out of the state for coffers in Texas and other Southwest states.

??Davis also blasted the Bush administration, saying the administration has
"utterly failed to discharge its responsibility" in the crisis, adding that
Vice
President Dick Cheney is "grossly misinformed" when it comes to California s
efforts to solve the situation. Because federal regulators have refused to cap
wholesale power prices, the California Public Utilities Commission has
proposed
that federal facilities including office buildings and military bases pay full
prices for real-time energy.

??Under a plan by PUC president Loretta Lynch, rates will jump as much as 48
percent for residential consumers using 130 percent or more above 2000
baseline
levels; up to 45 percent for commercial customers; and as much as 52 percent
for
industrial users. The PUC is set to meet Monday to approve the rate design. If
approved, implementation is set for June 1, retroactive to March 27.

??Separately, the California Senate approved sale of $13.4 billion in revenue
bonds to pay for electricity supplies. The average electricity consumer will
pay
an extra $2,000 over the next 15 years. Davis must sign the bill before it
becomes law. The state Assembly approved it recently .

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??????????????????????Copyright 2001 / Los Angeles Times

??????????????????????????????Los Angeles Times

??????????????????????May 11, 2001 Friday ?Home Edition

SECTION: California; Part 2; Page 17; Opinion Desk

LENGTH: 713 words

HEADLINE: Commentary;
;
Don't Write Off Davis Energy Plan

BYLINE: ALAN BLINDER, Alan Blinder, a professor of economics at Princeton
University, was, vice chairman of the Federal Reserve from 1994-96. He is the
senior, advisor to Saber Partners, which is advising Gov. Gray Davis on
energy,
policy

BODY:

??Might Californians finally be seeing a dim light at the end of the energy
tunnel? This spring and summer will be difficult times unless everything
breaks
just right. But Gov. Gray Davis' recently announced energy plan offers at
least
short-run management of the crisis--and a hope for a long-run solution. And
that's about all anyone should ask the government to do.

??Ignoring the history and some mind-numbingly complex details, the
electricity
problem comes down to this: Demand now outstrips supply by a wide margin even
on
a normal day, and by much more on days of peak demand. With the utilities no
longer credit-worthy, the state must fill the gap by buying on the wholesale
market. These days, that means buying high and selling low.

??Any comprehensive attack on this problem must have three components:
mechanisms for reducing demand, mechanisms for increasing supply and a pile of
money to cover the bills while the medicine works. The governor's plan, while
not perfect, has the three elements. It also avoids the wackier suggestions
from
both the right and the left.

??Let's work backward through the three components. First, the state needs
money to keep the lights on. One naive remedy would be to raise taxes to pay
all
the bills. No danger that any politician will ever latch onto that one. But a
related bad idea--raising retail electricity rates to cover all the
costs--does
have a following. Why is that a bad idea? Because the utilities are saddled
with
debt from the past. And things almost certainly will be brighter (pun
intended)
in the future.

??Like a family, when a government is faced with a huge, one-time
expense--say,
to build a highway--it generally borrows most of the money. That's sound
financial practice because it spreads what otherwise would be a ruinously high
cost over time. Davis wants to spread the cost of the current crisis by
issuing
bonds worth about $12 billion to $13 billion, secured by future payments for
electricity. I do not know whether this is exactly the right number. But the
principle is clear, and it's too bad the Legislature delayed the bond issue.

??Next comes supply. Wishful thinkers on the right have a simple solution:
Just
let retail prices rise, and more supply will come. The trouble is that it
won't,
at least not in the short run. Over years, greater supply is the only lasting
solution. But to expect much supply response in the short run is dreaming.

??The left has its own favorite silly idea: The state should seize control of
power plants and take over the business of supplying electricity. Seize? How
much good would that do to California's business climate? And does anyone
really
believe that the state can, over the long run, generate and supply
electricity
better than private business? There are, in fact, traces of public ownership
in
the Davis plan: The state is buying transmission lines, and a new public
authority would build power plants if private industry fails to do so. But the
governor sees public ownership as a last, not a first, resort.

??Finally, we come to the demand side, where true believers offer the same
remedy: Just let the retail price rise enough to cut demand back to the
available supply. Sound harsh? It is. Higher electricity prices must be part
of
the solution, at least in the short run. But relying exclusively on higher
rates
would be foolhardy and perhaps even ruinous to California's economy, because
titanic price hikes would be needed to cut demand by enough in short order. So
we would wind up inflicting pain on consumers without calling forth greater
generating or transmission capacity.

??The governor at first resisted the conclusion that consumer prices had to
rise. But he has now embraced it. His package includes not just price hikes
for
big energy users, but also financial incentives for those who reduce
consumption. More can be done in this regard, but he is at least on the right
track.

??Will these conservation measures get California through the next few months?
I wouldn't bet on it. But unless the federal government truly caps wholesale
electricity prices temporarily, demand management is about the only short-run
game in town.

??Pray for a cool summer and for a lot more rain behind the dams in the
Pacific
Northwest.

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?????????????????????????????14 of 106 DOCUMENTS

??????????????????????Copyright 2001 / Los Angeles Times

??????????????????????????????Los Angeles Times

??????????????????????May 11, 2001 Friday ?Home Edition

SECTION: Part A; Part 1; Page 26; National Desk

LENGTH: 1200 words

HEADLINE: THE ENERGY CRISIS;
NEWS ANALYSIS;
Bush, Rivals Don't Dare Ask Public to Make Sacrifices in Energy Crunch

BYLINE: RONALD BROWNSTEIN, TIMES POLITICAL WRITER

DATELINE: WASHINGTON

BODY:

??Amid their looming conflicts on energy policy, President Bush and his
critics
appear to have reached agreement on an unlikely point: Neither side is
preparing
to ask for significant sacrifices from the public to respond to rising prices
and squeezed supplies.

??In the energy policy blueprint it will release next week, the administration
is expected to present enhanced production as the key to easing the energy
crunch. Democrats and environmentalists, in response, are stressing measures
to
prod manufacturers to design more energy-efficient products, from cars to air
conditioners.

??But neither side is yet suggesting that ordinary Americans--whose average
energy consumption has increased steadily over the last 15 years--may have to
scale back lifestyles that increasingly include mammoth sport-utility
vehicles,
dawn-to-dark home computer use and new houses 50% larger than a generation
ago.

??In fact, as the debate over Bush's plan approaches, both sides are working
overtime to insist that their solutions will allow Americans to use virtually
as
much energy as they want--without sacrifice.

??In a striking declaration earlier this week, White House spokesman Ari
Fleischer portrayed unconstrained energy use as virtually an American
birthright. "That's a big no," he answered when asked if Bush believes
Americans
need to curtail their energy use. "The president believes that's an American
way
of life and that it should be the goal of policymakers to protect the American
way of life."

??More surprising, environmentalists mobilizing to fight Bush's plan are
sending a similar message. "We don't need to sacrifice a lifestyle in order to
save energy," says Dan Becker, director of the global warming and energy
program
for the Sierra Club.

??This improbable consensus reflects a deeper political calculation shaping
both sides' response to the energy challenge. After a decade in which American
life on almost every front--from energy to jobs to federal revenues--has been
defined by abundance, politicians have grown extremely reluctant to confront
voters with hard choices and unpleasant alternatives.

??The big question is whether either side's preferred solutions can resolve
the
long-term energy problem without forcing Americans to face at least some of
those hard choices.

??Compared to most issues, public opinion about the energy debate is unformed,
analysts in both parties agree. That's largely because few Americans have
thought much about the problem since the last gas lines disappeared 20 years
ago. "People aren't settled on what are the causes of the problem, let alone
what are some of the solutions," says pollster Mark Baldassare, a senior
fellow
at the Public Policy Institute of California.

??As the struggle to shape public opinion begins, the central division is
likely to exist between Bush's emphasis on new production and the
Democratic/environmentalist push for greater reliance on renewable energy and
conservation. But that loud dispute threatens to obscure the remarkable
convergence on an equally important point: To the extent either side sees
conservation as part of the solution, they portray it primarily as something
done for consumers rather than by consumers.

??White House aides say Bush isn't likely to completely ignore the value of
individual conservation; the Democratic energy alternative includes a
provision
that could eventually compel the government to discourage the use of vehicles
with poor fuel efficiency. But overall both sides are promising minimal
disruption--a stark contrast to the admission by California officials that
higher prices are needed to deter electricity consumption.

??Indeed, it's telling that, instead of discussing conservation, both Bush and
his critics are increasingly talking about energy efficiency. That formulation
implies engineering strategies rather than lifestyle changes to reduce
consumption. "With technology, there's no reason why . . . you've got to live
in
the dark, turn out all the lights, don't enjoy the things that our modern
society brings you," Vice President Dick Cheney said this week.

??Looming over these political and rhetorical calculations is the ghost of
President Carter, whose administration was plagued by repeated energy shocks
in
the late 1970s. When Carter unveiled his comprehensive energy plan just months
after taking office in 1977, his message hit a strikingly different note: The
crisis, Carter said, "will demand that we make sacrifices and changes in every
life."

??Behind those words, Carter offered an agenda bristling with thorny ideas to
discourage energy use: new taxes on gas-guzzling cars, automatic taxes on
gasoline triggered when consumption rose too fast, utility reforms that
increased costs for the heaviest users.

??But Congress rejected almost all these ideas, focusing instead on tax
incentives to encourage more efficient energy use, and Carter's efforts to
encourage voluntary conservation (like turning down the heat in winter)
became a
lasting symbol of weakness and ineffectuality.

??Today strategists on both sides agree that the public is even less inclined
to sacrifice. And in that climate, neither Bush nor Democrats are focusing on
a
paradox central to the energy riddle: While most products have grown more
energy
efficient over the past generation, energy use per person in America is still
rising.

??In the immediate aftermath of the 1970s oil shocks, per capita U.S. energy
use declined by roughly 8% from 1973 through 1985. But as the memory of those
disruptions faded, energy use per person increased almost 10% from 1985
through
1999, according to the federal Energy Information Administration.

??On several fronts, it appears the demand for bigger energy-intensive
products
is offsetting the efficiency gains of improved technology. Take homes. In an
April study, the National Assn. of Home Builders concluded that because of
such
innovations as greater use of insulated windows and more efficient furnaces,
new
homes today use energy twice as efficiently as they did 30 years ago. But
despite those improvements, the overall trend among new homes is toward
greater
energy consumption.

??In the first years after the 1970s oil shock, average fuel efficiency for
all
passenger vehicles in America steadily increased, peaking at 25.9 miles per
gallon in 1987. Since then average fuel efficiency has declined, dropping to
24
mpg in 2000, the lowest it has been since 1980, according to the Environmental
Protection Agency.

??Some analysts think both sides are selling the public short by exempting
them
from sacrifice in the growing energy debate. "Americans have heard messages
about changing their ways and have been accepting when it comes to
conservation," says Baldassare.

??But the dominant instinct is to target other causes--and solutions--for the
challenge, with Bush blaming environmental restrictions that have blocked
drilling or new power plant construction and Democrats pointing fingers at oil
companies, car manufacturers and the administration's links to both.

??"Nobody wants to be in a position of telling the American public they can't
have what they want," acknowledges one top Bush political advisor.

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??????????????????????????????Los Angeles Times

??????????????????????May 11, 2001 Friday ?Home Edition

SECTION: Part A; Part 1; Page 26; National Desk

LENGTH: 927 words

HEADLINE: THE ENERGY CRISIS;
;
House Committee Rejects Electricity Price Controls;
Strategy: In a blow to California's governor, Congress signals it won't rein
in
soaring costs.

BYLINE: GREG MILLER, RICHARD SIMON, TIMES STAFF WRITERS

DATELINE: WASHINGTON

BODY:

??In the first test of congressional sentiment on California's power problems,
a House panel on Thursday rebuffed an effort by Democratic lawmakers to
legislate price caps on wholesale electricity.

??The proposal, voted down 20 to 12 by the House energy and air quality
subcommittee, would have required the Federal Energy Regulatory Commission to
impose price controls keyed to the cost of generating power.

??The Republican-controlled panel went on to approve a bill containing a
number
of less aggressive energy crisis measures, such as allowing California to
relax
environmental restrictions on power plants and extending daylight saving time
to
reduce evening electricity consumption.

??But the vote on price controls, which split largely along party lines, was
the most contentious issue addressed by the subcommittee. Although price cap
advocates are expected to press their campaign at least twice more in the
House,
Thursday's vote was a significant setback. It signaled that Congress is not
inclined to rein in soaring energy prices, despite repeated pleas from Gov.
Gray
Davis and other state officials to do so.

??Rep. Henry A. Waxman (D-Los Angeles), who offered the price control measure
as an amendment to the energy bill, argued that it would protect consumers
from
price gouging while preserving "reasonable" profit margins for power
suppliers.

??Without price controls, he said, the bill "does not do for California what
we
need, and it does a lot of things for our state we don't want."

??But the other three Californians on the subcommittee--all
Republicans--disagreed, and voted against Waxman's amendment, saying they
believe price controls would exacerbate the problem by discouraging investment
in new sources of energy.

??"I recognize there's tremendous political pressure on us, but do not believe
it's the right thing to do," said Rep. Mary Bono (R-Palm Springs).

??She was joined in voting against the measure by Reps. Christopher Cox
(R-Newport Beach) and George P. Radanovich (R-Mariposa). The three California
Republicans ensured the amendment's defeat, because one Democrat who voted
against the measure, Rep. Ralph M. Hall of Texas, said he would have supported
it if all of the California members of the subcommittee had done so.

??In Sacramento, Davis lashed out at Bono, Cox and Radanovich for opposing
price caps.

??"I find it very surprising that people here in California experiencing this
crisis can go back to Washington and vote against the best interests of
constituents of this state," Davis said.

??Waxman indicated he would attempt to revive the price cap amendment when the
bill is taken up by the full House Energy and Commerce Committee.

??A final test could come later this month, when the full House is expected to
vote on the bill. Four California Republicans who are not on the energy
committee have already signaled they would support a price control amendment.

??Thursday's vote was the first congressional action directed at California's
energy crisis, and underscored the extent to which the center of political
debate on the issue is shifting from Sacramento to Washington.

??Next week, the White House plans to unveil a comprehensive national energy
strategy. The plan is expected to emphasize long-term solutions, ranging from
new oil exploration in Alaska to construction of hundreds of new power plants
and refineries.

??With California experiencing rolling blackouts and gasoline prices surging
nationwide, the White House has become increasingly sensitive to criticism
that
its plan won't provide much immediate help.

??At a news conference Thursday, White House spokesman Ari Fleischer stressed
that "the president's focus is going to be on doing everything he can for all
terms: short-term, medium-term and long-term."

??House Republicans attending Thursday's subcommittee session were careful to
endorse the administration's position that the federal government's ability to
help California in the short term is limited.

??"We can't make it rain. We can't make it snow. We can't make it cool in Palm
Springs," said Rep. Joe Barton (R-Texas), sponsor of the emergency bill and
chairman of the subcommittee.

??Still, he said, Congress can provide some assistance. Barton's bill, which
was approved 17 to 13 by the subcommittee, contains more than a dozen
provisions
designed to curb consumption and enhance power supplies.

??Some of the key provisions would:

??* Authorize California's governor to waive some emission requirements on
natural gas-fired power plants on "emergency" days of high demand. Democrats
said Davis hasn't sought such discretion, and the measure is unlikely to help
because environmental regulations have not hindered power generation.

??* Allow energy users to resell some of the electricity they are entitled to
consume but don't. Republicans said this would create a financial incentive to
conserve, but Democrats said they fear it would undercut existing state
programs
that reward conservation.

??* Allow some power suppliers to suspend contracts with financially strapped
utilities. The measure is designed to enable companies that have cut off
supplies for lack of payment to cut new deals with other utilities or users.

??* Require federal facilities in states where electricity emergencies have
been declared to curb their consumption by at least 20% compared with a year
earlier.

??* Permit California to extend daylight saving time beyond October.

??*

??Times staff writers Edwin Chen in Washington and Dan Morain in Sacramento
contributed to this story.

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??????????????????????????????Los Angeles Times

??????????????????????May 11, 2001 Friday ?Home Edition

SECTION: Part A; Part 1; Page 1; Metro Desk

LENGTH: 1646 words

HEADLINE: THE ENERGY CRISIS;
NEWS ANALYSIS;
Power Rescue Plan Rests on Many 'Ifs'

BYLINE: NANCY VOGEL, RICH CONNELL, ROBERT J. LOPEZ, TIMES STAFF WRITERS

BODY:

??The success of Gov. Gray Davis' plan to end California's energy crisis rides
on assumptions that, if wrong, could lead to billions of dollars in runaway
costs for taxpayers.

??Davis, who signed a historic $13.4-billion bond measure Thursday to finance
the plan, has refused to release key data and presented a single model for how
California will buy electricity--and pay for it--over the next 15 years.

??If Davis and his cadre of financial advisors are right, the state will
emerge
from the most ominous period of the crisis in less than two years, flush with
cash and the prospect of electricity rate cuts. By then, the hope goes, the
power suppliers Davis has vilified will be reined in.

??If his predictions are off by modest margins, which even many state
officials
and energy experts say is likely, the state may have to employ tactical
blackouts to control costs, siphon money that could be used for other
services,
go deeper in debt or raise electricity rates above the record increases of
this
year.

??The governor's plan largely rests on these crucial assumptions: that
consumers will conserve a record amount of power at peak usage times, that
energy prices will drop precipitously, and that the state will lock in far
more
contracts for long-term power. But those three assumptions could prove faulty,
according to government financial records and interviews with state officials,
Wall Street analysts and energy experts.

??Davis is banking on that troika to quickly tame the wild prices of
last-minute power--which hit an apparent record of $2,000 for a megawatt-hour
Wednesday. Such purchases so far have put the state on the hook for $6 billion
and pushed major utilities to the brink of ruin.

??Davis' plan assumes that the state will reduce peak demand by 2,484
megawatts--enough to supply nearly 2 million homes--through three programs run
by the California Independent System Operator, which keeps power running to
homes and businesses across the state.

??But Cal-ISO managers say they will be lucky to achieve a fraction of that
savings this summer.

??They say that one of the programs listed in the governor's plan was shelved
because regulators had raised concerns about air pollution. Another, aimed at
businesses, is likely to yield only about half of the 600 megawatts the
governor
has assumed will be saved when supplies are tight this summer, said Cal-ISO
Project Manager Bill Wagner.

??"There's a lot of 'ifs' in there," he said of the conservation program,
which
would pay businesses to cut back during critical hours. He said the utilities
are months behind in installing meters to measure the savings.

??Officials at another state agency in charge of a similar conservation
program, the Public Utilities Commission, also said they are not sure about
hitting targets on which the bond plan is based.

??PUC Senior Analyst Robert Strauss said he has no idea how many businesses
will agree to curtail electricity consumption in exchange for cheaper power
rates this summer. The program is only a month old, he said.

??"We're in a new situation that we don't have good experience with," Strauss
said. "Who's going to sign up for these programs? We don't really know."
Another
program that Davis hopes will conserve 1,600 megawatts has attracted interest
from just two businesses since March.

??"It's pretty ambitious to think we're going to get 1,600 megawatts by June
in
that program," said Cal-ISO's Wagner.

??Beyond Davis' assumptions about conservation, the success of his hard-fought
bond measure relies heavily on how much the state will pay for electricity
during the next two summers. If the price is higher than forecast by Davis,
the
bond money could be consumed more quickly, potentially forcing the state to
borrow more, dip into tax funds or raise customer rates again.

??To keep prices down, the Davis administration has struggled to lock up in
contracts most of the peak-hour power needed for the next two summers to avoid
premium, eleventh-hour prices.

??In his effort to push his bond legislation through the Capitol, he has
suggested that about 50 such contracts will be signed to produce half of the
peak demand the state needs. And that, his advisors say, doesn't count other
contracts they think will materialize.

??So far, the administration has fallen far short, achieving final agreements
on only 28 contracts as of Thursday.

??If that gap persists, the state will probably be forced to buy electricity
on
the expensive spot market, which could eat into the bond money.

??"I think the operative word is uncertainty," said Paul Patterson, an energy
analyst with Credit Suisse First Boston. "There are too many pieces, [and] all
you need is for one or two of those not to work out substantially and things
change."

??Patterson, who says he remains cautiously optimistic about the governor's
plan, was among a group of Wall Street analysts who were briefed last week by
Davis' top advisors.

??Some wondered about who would provide the additional power that Davis had
incorporated into his plan. Others questioned whether investors would buy the
bonds with so many assumptions built into the measure.

??During the briefing, the governor's advisors said one option being
considered
is to refuse to pay the highest prices for power and "accept some sort of
rolling blackout scenario."

??One of the governor's chief energy consultants, Joseph Fichera, told the
Wall
Street analysts that if suppliers think they can profit by holding back power
until the threshold of blackouts, the state may simply say no, leaving them
with
no sale.

??Through calculations that include contracts and conservation, Davis'
advisors
arrived at another assumption that has drawn skepticism. They insist that the
purchase of any power not under contract will average just $195 per
megawatt-hour this summer--helping slash overall power costs by hundreds of
millions.

??Critics say the California market is simply too volatile to forecast. Before
Tuesday's blackouts, for example, prices on the last-minute market had been
below $800 for a megawatt-hour, a considerable amount. But not as much as it
was
Wednesday when the state paid Houston-based Reliant Energy $2,000, Davis said
Thursday.

??A report by Republican Assembly members concluded that if Davis' assumption
that non-contracted power will average $195 is off by just 10%, electricity
would cost an additional $250 million by September. Over two years, those
additional costs could soar to $1.1 billion, the GOP study found.

??Democratic state Controller Kathleen Connell, whose staff has attempted to
analyze the governor's report, is warning that rising power costs could tear
through the bond funds and possibly expose the state's general fund.

??Connell accused the governor of tailoring his assumptions and numbers to
neatly fit his goal of assuring the public--and Wall Street--that an end to
the
crisis is near.

??Fichera, who helped prepare the report, insists that the
administration's bond plan is conservative and presents the most reasonable
scenario of the converging forces of conservation and prices.

??Even if things do not fall into place, Fichera said, there is an extra $1
billion packaged into the measure, along with an expectation of billions more
in
later years to cover any shortfalls.

??"Any realistic scenario," Fichera said, "we believe we have the resources to
cover."

??Fichera said he sees only a slim possibility that power costs in the next
two
years could outpace the available bond money, forcing the state to borrow
more.
He said such a loan could easily be paid back by the recent utility rate
increases, which would cover both dropping costs of power and the bonds within
the next three years.

??Fichera declined to provide The Times with figures showing at what point
higher power costs could consume the cushion he said is built into the
governor's plan. Public officials and newspapers, including The Times, have
sued
the administration for more details about the state's power costs.

??But Davis and his consultants say key financial information must be kept
secret to prevent energy traders from gaining more leverage in the state's
power
market.

??But that confidence was tempered in a state document given to Wall Street
analysts that recently accompanied an unrelated bond issue.

??The document acknowledged that the assumptions underlying Davis' financial
plan to restore stability to the California electricity market were "subject
to
many uncertainties." "There can be no assurance," the document concluded,
"that
there will not be future disruptions in energy supplies or related
developments
which could adversely affect the state's economy."

??Making Assumptions

??Gov. Gray Davis' energy rescue plan, financed by a $13.4-billion bond
measure
he signed Thursday, rests on several questionable assumptions. Key among them:

??CONSERVATION: California businesses and residents will cut more than 7,200
megawatts from peak demand this summer. That is about one-sixth of the height
of
demand on a hot August day.

??PRICES: Conservation and new energy sources coming online soon will create
downward pressure on California's wholesale electricity market, causing the
average prices the state pays for power to drop sharply.

??CONTRACTS: The state will finalize about 50 long-term contracts for power
that will cover the expected shortfall in electricity expected this summer
during periods of the highest energy use. So far, the state has only 28 signed
contracts.

??*

??RELATED STORIES

??Rising Hopes: Discovery of a natural gas deposit beneath Delano has town
dreaming of riches, B1

??Defiance: Ayn Rand Institute, a bastion of laissez-faire capitalism,
denounces calls to conserve, B5

??Approval: State clears the way for two idle generators in Huntington Beach
to
resume operation, B6

GRAPHIC: PHOTO: Gov. Gray Davis heads toward news conference at which he
signed
a $13.4-billion bond measure. PHOTOGRAPHER: ROBERT DURELL / Los Angeles Times

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??????????????????????????????Los Angeles Times

??????????????????May 11, 2001 Friday ?Orange County Edition

SECTION: California; Part 2; Page 1; Metro Desk

LENGTH: 924 words

HEADLINE: Orange County;
;
Restarting of 2 Generators in O.C. OKd;
Energy: State panel grants a 10-year run for the AES Corp. units despite
concerns of Huntington Beach officials and residents.

BYLINE: JENIFER WARREN, TIMES STAFF WRITER

DATELINE: SACRAMENTO

BODY:

??Granting the governor's wish that power plants receive speedy approval, the
California Energy Commission cleared the way Thursday for the restart of two
idled generators that will double the output of a plant in Huntington Beach.

??The vote came despite concerns from city officials and nearby residents that
potential environmental and health risks associated with the restart were not
adequately examined by regulators.

??The commission's action allows AES Corp. to run the two controversial units
for at least 10 years, provided that a midterm review finds that operators are
taking steps to limit any harm the plant may cause to seawater quality and
marine life.

??The commission also required the company to sell all the power generated by
the units, enough to supply about 337,500 homes, within California--a
restriction unprecedented in the state.

??Some attorneys questioned whether the panel had the legal authority to place
such a restriction. But Commissioner Robert Laurie said that while the limit
"may not be good long-term policy," the state's power emergency warrants it
now.

??The commission's unanimous vote capped weeks of arduous negotiations
involving AES, the state and Huntington Beach officials, who called the
10-year
permit "a major disappointment." AES officials pushed for the 10 years on
grounds that a shorter time frame made the economics of the project iffy.

??City officials preferred a five-year permit, noting that the company's track
record--it once paid a $17-million fine for allowing too much pollution to
spew
from its Long Beach plant--raises doubts about its future performance. The
commission's staff also favored five years, with the possibility of a
five-year
extension.

??"They have not exactly been great corporate citizens," Matt Lamb, project
manager for Huntington Beach, said of AES. "This is a grossly inefficient
plant
that has been mothballed and they're basically kick-starting it. We don't
think
it deserves 10 years."

??But Gov. Gray Davis--who has publicly pushed the commission to approve
plants
quickly--hailed the decision. "That's good news. That's supply we're counting
on," he said.

??The two Huntington Beach units are 40 years old and have been idle since
1995. But the energy crisis has made the old valuable once again, and AES
plans
to invest $150 million to repower the generators--once scheduled for
demolition.

??The units represent almost 10% of the 5,000 megawatts Davis has said he
would
bring into service this summer to avert an electricity shortage. Recent
estimates, however, suggest the governor's pledge was overly optimistic.

??Time Frame Still Uncertain

??And while both Davis and the Energy Commission are expecting the Huntington
Beach project to come on line in August, AES Southland President Mark Woodruff
said Thursday that it's unclear whether the units would be up and running that
soon.

??The AES project is among a handful receiving fast-track approval under the
governor's executive order earlier this year requiring expedited review of
such
plants. It's the first restart to be approved.

??In normal times, a 450-megawatt project such as the one approved Thursday
might have taken a year's worth of study, public hearings and other scrutiny,
said Claudia Chandler, a commission spokeswoman. Today's expedited review
shrinks that to just 60 days.

??That clearly rankles some Huntington Beach residents, who, in testimony
before the commission, wondered whether emissions, ocean pollution and other
threats had been thoroughly studied.

??"I think it's almost outrageous what's being foisted on the public," said
Rich Lloyd, who lives about a quarter mile from the plant. "What relief are
you
going to give to all these people, all these schoolchildren, who have to
breathe
these emissions for 10 years?"

??Huntington Beach Councilwoman Shirley Dettloff said she too was troubled by
the fast-track licensing process. "We're taking a risk as a city," she said.
"If
a price has to be paid, our citizens will be paying that price."

??Critics are alarmed by a UC Irvine study concluding that the plant--which
now
uses and discharges about 300 million gallons of seawater each day as
coolant--may combine with ocean currents to attract sewage released miles
offshore. Many residents suspect the plant contributed to pollution that
caused
repeated beach closures in 1999.

??Acknowledging the concerns, the commission required AES to spend $1 million
to study whether water quality is at risk. The company also must spend
another $
2.5 million to monitor fish deaths caused by its seawater intake system. If
too
many white croaker, queenfish and other species become trapped and die, AES
may
be required to modernize its equipment, commission officials said.

??Other complaints have focused on the noise, smoke and smells produced by the
plant. Jane Riley, who lives nearby, plans her outings with son Daniel, 6,
around the thick clouds of yellow-brown smoke that are a part of everyday
life.

??"I try to avoid it. I take a look at which direction it's going," Riley
said.
With two more units fired up, a bad situation will only get worse, she fears.

??In other action Thursday, the commission approved a 95-megawatt "peaker"
plant in the Central Valley city of Hanford. Peaker plants can produce large
amounts of power in short bursts, and the governor is counting on such
facilities to make up about 40% of California's electricity deficit this
summer.

??*

??Times staff writers Seema Mehta and Dan Morain contributed to this story.

GRAPHIC: GRAPHIC: Powering Up, Los Angeles Times

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??????????????????????????????The New York Times

??????????????????May 11, 2001, Friday, Late Edition - Final

SECTION: Section A; Page 30; Column 4; National Desk

LENGTH: 672 words

HEADLINE: House Moving to Ease California Power Crisis

BYLINE: ?By PHILIP SHENON

DATELINE: WASHINGTON, May 10

BODY:

??With members of Congress stepping up the partisan fight over California's
energy crisis, the House moved today toward passage of a bill that Republican
sponsors said would increase the supply of electricity in California but would
not impose the energy price caps sought by Democrats.

??The bill, which would allow for an easing of clean-air laws to keep power
plants in service and would simplify rules allowing the federal government to
sell its power to the state, was approved 17 to 13 in an energy subcommittee.
The vote, which was along strict party lines, moves the bill to the full
Energy
and Commerce Committee.

???The vote came after a debate in which lawmakers made clear that they sensed
both political danger and political opportunity from the crisis that has led
to
rolling electricity blackouts across California, the nation's most populous
state. The situation is expected to worsen with the arrival of the summer
heat.

??Democrats tried to place much of the blame for the crisis on the Bush
administration, which they said had done little to alleviate the electricity
shortage. "Have a tough summer -- that's the message from the Bush
administration," said Representative Edward J. Markey, Democrat of
Massachusetts. "The message is, 'Help is not on its way.' "

??Republicans said that the Democratic governor of California, Gray Davis, and
the Democrat-controlled State Legislature were responsible for the energy
shortage because they failed to act earlier to negotiate long-term contracts
for
electricity.

??Representative George P. Radanovich, Republican of California, defended the
Bush administration and federal energy regulators as he took aim at Governor
Davis.

??"It's not the lack of federal involvement that's caused this problem," Mr.
Radanovich said. "It was really the mismanagement of this issue for the past
year by the governor and the State Legislature in California. That's what
brings
us here."

??For his part, Governor Davis released a letter in Washington in which he
insisted that he was "doing everything I can in my state to remedy the energy
crisis," noting that no major power plants had been built in California in the
12 years before he took office, when the state's governors were Republicans.

??The letter to the subcommittee asked that the bill under debate today
include
an amendment that would cap the price of wholesale electricity to prevent
price-gouging that could drive utility companies to bankruptcy.

??"The current structure is allowing energy suppliers to charge excessive,
unwarranted rates for wholesale energy," he said. "States do not have the
authority to regulate wholesale interstate energy prices; that power falls
within the sole jurisdiction of the federal government."

??But the subcommittee rejected the governor's request, defeating an amendment
from Representative Henry A. Waxman, Democrat of California, that would have
capped wholesale prices in Western markets for 18 months.

??Representative Billy Tauzin, the Louisiana Republican who is chairman of the
Energy and Commerce Committee, said that price caps would "do nothing, not one
single thing, to get one additional watt of electricity to California when it
needs it most." He said that price limits would worsen the crisis because they
would "justify every utility and municipality in the West holding onto their
reserves for their own customers."

??At the White House, President Bush's spokesman, Ari Fleischer, said that the
president remained "worried about energy prices" and that he would "remain
vigilant to make sure there's no price-gouging." Next week Mr. Bush is
planning
to release a national energy blueprint that is expected to call for more oil
and
gas drilling and the construction of new power plants.

??The bill approved by the subcommittee would allow Governor Davis to waive
some clean-air regulations to keep more power plants in service during peak
hours this summer, and would force the federal government to make further cuts
in energy use in federal offices in California.

??http://www.nytimes.com

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??????????????????Copyright 2001 The New York Times Company

??????????????????????????????The New York Times

??????????????????May 11, 2001, Friday, Late Edition - Final

SECTION: Section C; Page 1; Column 2; Business/Financial Desk

LENGTH: 1819 words

HEADLINE: A Conservation Countdown

BYLINE: ?By BARBARA WHITAKER

DATELINE: LOS ANGELES, May 9

BODY:

??To understand what California is up against in its search for enough
electricity to get through the summer, look no further than Michael Chroman,
owner of Brooklyn Hardware in East Los Angeles.

??In the months since the energy crisis began, he has not changed the way he
does business or the way he lives.

???"I guess I think it's pretty much contrived," Mr. Chroman said of the
shortage. "I think it's something they want to do to increase the rates, and
they'll do it whether I conserve or not."

??As for the rising rates, "I can afford it, I guess," he said, as he loaded
beverages into his Jeep Grand Cherokee outside a local Costco.

??The state, on the other hand, cannot. Because little new power will be
available soon, conservation is crucial.

??Armed with more than $850 million in new money for an array of initiatives,
the state is establishing programs to educate consumers on ways to use
electricity more efficiently, provide a multitude of rebates on
energy-efficient
lighting and appliances, and support businesses wanting to cut electricity
use.
The state has also strengthened requirements for new construction and pledged
to
use 20 percent less electricity in state offices when power supplies fall to
the
level of a Stage 2 emergency, which is just short of forcing blackouts.

??"They're putting everything but the kitchen sink into this, and it's
probably
going to take that kind of effort," said Martin G. Kushler, director of the
utilities program for the American Council for an Energy Efficient Economy, a
nonprofit group based in Washington that promotes energy efficiency.

??The initiatives look promising, experts say -- but not right away. "Will all
these programs be in place by summer?" said Ed Vine, a staff scientist who
evaluates energy-efficiency programs at the Lawrence Berkeley National
Laboratory. "I think that's a big question mark. I think they may get to this
goal, but it may be next summer."

??One hurdle is that there is little fat to cut. As Mr. Kushler and other
energy experts have noted, California has been a leader in energy efficiency
for
more than two decades, and its per capita consumption is among the lowest in
the
country.

??"California is entering uncharted territory," Mr. Kushler said. "What's
different here is the magnitude of what they are trying to accomplish in a
very
short period of time."

??This week was not encouraging, with the first rolling blackouts since March
-- necessitated by a bout of unusually warm weather just when some power
plants
were out of service, mainly for maintenance.

??The state projects a shortfall of as much as 5,000 megawatts at periods of
peak demand this summer -- out of projected total demand of about 55,000
megawatts. To provide a cushion, it has a plan to cut use by 5,200 megawatts.
And it hopes to find 2,000 of those megawatts -- enough to power two million
homes -- through consumer outreach and incentive programs. A big question is
whether that 2,000 figure is realistic.

??"Quite frankly, the level of savings they're projecting from that have never
been accomplished anywhere," Mr. Kushler said. "On the other hand, the
situation
California finds itself in has never been found before."

??Much will depend on people like Mr. Chroman. At his home in Los Angeles, he
gets his electricity from the city's Department of Water and Power. That
public
utility did not participate in deregulation and has not suffered the same
problems confronting Pacific Gas and Electric, which recently filed for
bankruptcy protection, and Southern California Edison, whose rates are about
to
rise sharply. At his business, Mr. Chroman is served by Southern California
Edison, a unit of Edison International. And, like many Californians, he shows
no
inclination to conserve.

??With little hope of getting significant sources of new generation on line by
summer, California -- which confronted rolling blackouts this winter as
electricity ran short and prices skyrocketed -- is limited in what it can do.

??The state is seeking a 10 percent across-the-board reduction in energy
consumption, and state government is leading by example, making numerous
changes
in buildings, right down to the way janitors clean, while turning off
unnecessary lights and office equipment.

??It also moved quickly to strengthen energy-efficiency regulations for
commercial and residential construction, which, when they take effect on June
1,
will make the state's guidelines the most stringent in the nation.

??Additional conservation financing approved in April includes $50 million for
energy-efficient household appliances; $60 million for high-efficiency
lighting
in commercial buildings; $35 million for improving the ability to scale back
heating, ventilation and air-conditioning when shortages loom; $35 million for
real-time or time-of-use meters; and $50 million for peak load reduction
programs.

??There is also about $240 million for assistance for low-income customers
that
will include weatherization programs, cash assistance and discounts.

??But state officials are racing the clock to get the money distributed before
hotter temperatures play havoc with demand, and consumer groups have
criticized
the state for taking too long to act.

??Although much of the new financing will be run through existing channels,
questions remain about whether the system can cope.

??"Is the infrastructure ready to handle this?" Mr. Vine said. "I don't think
anybody knows."

??He also questioned whether the bankruptcy filing of Pacific Gas and
Electric,
a unit of the PG&E Corporation, would affect its ability to run rebate
programs
and whether its financial difficulties, as well as Southern California
Edison's,
would affect decisions like whether to hire additional people to carry out
such
programs.

??But whether the state reaches its goal ultimately comes down to whether
consumers significantly change their behavior. That is far from clear.

??"Programs that rely only on behavioral changes are fickle," said Thomas
Feiler, managing director of the Rocky Mountain Institute, which promotes
energy
efficiency and finding renewable energy sources.

??Millions of dollars is being spent to get the message out, enlisting a
variety of groups. The State Department of Consumer Affairs is orchestrating a
$20 million advertising campaign. McDonald's is putting energy-conservation
messages on four million tray liners in 1,100 restaurants. The Grocers
Association is working with retailers to put messages on receipts and in
grocery
bags.

??Dana Michels, a 28-year-old Los Angeles resident served by the city's
Department of Water and Power, said she did not need to be sold. She said she
had always been thrifty about energy and was even more careful now to turn off
lights and other household items, like the VCR, when they were not in use.
But,
she said, many people she works with do nothing.

??In fact, while driving through Santa Monica earlier this spring, she was
appalled to see homes that still had Christmas lights lighted.

??By contrast, in areas harder hit, particularly where the investor-owned
utilities are predominant, sales of energy-efficient lighting like fluorescent
bulbs are soaring.

??Home Depot said sales of such lighting were up more than 300 percent in
Northern California, where PG&E is predominant, though the products have not
really caught on at stores in Los Angeles and Orange Counties; statewide, they
are up 224 percent.

??According to state figures, there is reason to feel encouraged. Power use
dropped 6 percent in January, compared with January 2000; 8 percent in
February;
and 9 percent in March and April.

??Representatives from all three investor-owned utilities -- Pacific Gas and
Electric, Southern California Edison and San Diego Gas and Electric -- said
they
had seen sharp increases in consumers taking advantage of rebate programs in
recent months. Though changing a few light bulbs may seem like no big deal,
energy officials say no detail is too small to make a difference.

??Steve McCarty, director of customer energy management for Pacific Gas and
Electric, said that if every customer turned off three 75-watt bulbs, it would
mean a 2 percent energy savings a month. Unplug that second refrigerator and
that is an additional 9 percent.

??"There are no silver bullets," he said. "Only silver BB's."

??State officials said businesses were taking advantage of programs to help
them change out inefficient items like lighting and air-conditioning.
Businesses
are also being asked to turn up the thermostat and turn off some lights,
including signs outside stores after closing. Home Depot said that by taking
steps like turning off outdoor lighting after closing, its western division
saved more than 1.5 million kilowatt hours in February, the equivalent of the
total consumption of 1,800 homes or 9 Home Depot stores.

??The Building Owners and Management Association, whose members own about 500
million square feet of office space in California, has pledged to cut
consumption by 10 percent. Janitors are supporting their efforts by team
cleaning and turning off unnecessary lights. But the organization acknowledged
that getting tenants to cut back would be a harder sell.

??In addition, there does not appear to be wide compliance with an executive
order by Gov. Gray Davis that businesses -- particularly auto dealers,
shopping
malls and megastores -- reduce outdoor lighting by 50 percent after hours.
Although the order provides for fines of up to $1,000 for violations, no
tickets
have been issued and law enforcement officials have expressed reluctance about
enforcing the order. With downtown office buildings still leaving many lights
on
well after business hours, state officials are weighing steps to allow
landlords
to find a way to charge tenants based on electrical use.

??While much of what is being called for is voluntary, the state's plan could
get a big lift as many consumers confront higher rates next month. The Public
Utility Commission has approved a rate increase of 3 cents a kilowatt hour, on
top of a previous temporary 1-cent increase that was made permanent. That will
increase bills for PG&E and Southern California Edison customers by as much as
46 percent. However, rates are tiered to reward those who conserve, with
customers who stay within 130 percent of a base line level of use facing no
increase.

??In addition, the state has a plan that will provide a 20 percent rate
reduction for customers of investor-owned utilities who use 20 percent less
electricity than they did last year.

??"California has world-class experience in energy-efficiency programs," said
Mr. Feiler of the Rocky Mountain Institute. "Where the rubber will meet the
road
is how those plans are implemented. Are consumers seeing the right incentives,
the right type of rebates, the right type of rates to bring about a behavioral
change? That will determine whether they win the battle this summer."

??http://www.nytimes.com

GRAPHIC: Photos: Stephen Purdie adjusts new energy-efficient lighting in the
factory area at Plastikon Industries in Hayward, Calif. (Thor Swift for The
New
York Times); Mark Medrano, chief engineer for one of Arden Realty's buildings
in
Long Beach, Calif., dismantles an older cooling unit that is being replaced
with
one that is more energy efficient. (Edward Carreon for The New York Times)(pg.
C1); In Fresno, Calif., Peter Garcia gets advice on improving home energy
efficiency from Anthony Nush, an inspector for Pacific Gas and Electric. (Gary
Kazanjian for The New York Times)(pg. C12)

Chart: "Making Ends Meet"
California has an ambitious plan intended to cut peak power use this summer by
5,200 megawatts, or almost 10 percent of the projected peak use of about
55,000
megawatts. It hopes consumer outreach and incentives will save 2,000.

PUBLIC MEDIA CAMPAIGN
1,000 MEGAWATTS
$10 million will be spent on public awareness about conservation.

RATE INCENTIVES
1,000 MEGAWATTS
Customers who use 20 percent less power than they did last year can get a 20
percent rate reduction.

EFFICIENCY AND ASSISTANCE PROGRAMS
1,700 MEGAWATTS
Programs encourage everything from energy- efficient buildings to meters that
promote off-peak power use.

POWER CUTOFFS
1,500 MEGAWATTS
Some customers allow power to be cut off at peak times if needed.
(Source: California State and Consumer Services Agency)(pg. C1)

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??????????????Copyright 2001 Knight Ridder/Tribune News Service
???????????????????????Knight Ridder/Tribune News Service

????????????????????????????San Jose Mercury News

?????????????????????????????May 11, 2001, Friday

SECTION: STATE AND REGIONAL NEWS

KR-ACC-NO: ?K0884

LENGTH: 669 words

HEADLINE: House panel votes down price cap legislation

BYLINE: By Jim Puzzanghera

BODY:

??WASHINGTON _ Legislation to limit wholesale electricity prices in California
and the West was defeated in a congressional subcommittee Thursday, with
Democratic backers vowing to press forward and warning that Republicans who
opposed it could face the wrath of the voters.

??"I think what the Republican-dominated committee has said is, 'California,
drop dead,'" said Rep. Henry Waxman, D-Calif., the sponsor of the plan, which
failed by a 20-12 vote in the House of Representatives Energy and Air Quality
subcommittee.

??The proposal was an amendment to the Electricity Emergency Relief Act, a
measure that tries to ease the crisis in California by, among other things,
providing federal money to relieve transmission constraints and allowing the
governor to waive federal environmental regulations so power plants can
continue
operation during emergencies.

??That legislation, sponsored by the subcommittee chairman, Rep. Joe Barton,
R-Texas, was approved along party lines, 17-13, and now heads to the full
committee. He said the legislation will not stop blackouts in California, but
will help ease the problems.

??Relaxing clean air requirements also will be part of the Bush administration
comprehensive energy plan, to be released next week. The Associated Press
reported that the plan will call for relaxing the requirements to help
refiners
meet gasoline demand. The plan also will call for tax breaks for some
renewable
energy such as wind and solar panels, according to government sources.

??The refinery proposal is aimed at addressing a petroleum industry complaint
that federal and local air quality rules often require production of slightly
different blends of gasoline, putting added strain on the supply and
distribution systems.

??But California officials are most concerned with trying to rein in
electricity prices this summer. The Democratic plan in Congress for so called
"cost-of-service based rates," would have required the Federal Energy
Regulatory
Commission to limit the price of wholesale power sold in California and the
west
over the next 18 months to the cost of producing the electricity plus a
reasonable profit ranging from 11 percent to 15 percent.

??But with the Bush administration strongly opposed to any price limits for
electricity, the legislation has faced a steep uphill climb. Similar
legislation
has been proposed in the Senate by Sens. Dianne Feinstein, D-Calif., and
Gordon
Smith, R-Ore.

??The three California Republicans on the House subcommittee _ Reps.
Christopher Cox of Newport Beach, George Radanovich of Fresno and Mary Bono of
Palm Springs _ all voted against the price limits, which are strongly
supported
by Gov. Gray Davis. Waxman is the only California Democrat on the
subcommittee.

??Davis on Thursday criticized the Republicans from California.

??"I find it very surprising that people here in California experiencing this
energy crisis can go back to Washington and vote against the best interests of
the constituents of this state," he said.

??Rep. Billy Tauzin, R-La., chairman of the full Energy and Commerce
Committee,
urged his colleagues to defeat the price limits, saying such plans have only
exacerbated energy shortages in the past by discouraging companies from
building
new supply. The limits on retail prices that California instituted in its 1996
deregulation plan helped cause the crisis, he said.

??"We don't need to repeat the mistakes California already has made, we need
to
avoid them," he said.

??But Waxman argued that California needs a temporary "time out" from the
dysfunctional electricity market. Congress needs to act because federal energy
regulators have failed to institute the price limits, opting instead for a
plan
to more loosely regulate prices only during Stage 2 and 3 emergencies in
California this summer.

??KRT CALIFORNIA is a premium service of Knight Ridder/Tribune

??(c) 2001, San Jose Mercury News (San Jose, Calif.).

??Visit Mercury Center, the World Wide Web site of the Mercury News, at
http://www.sjmercury.com/

JOURNAL-CODE: SJ

LOAD-DATE: May 11, 2001

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?????????????????Copyright 2001 The Chronicle Publishing Co.

?????????????????????????The San Francisco Chronicle

?????????????????????MAY 11, 2001, FRIDAY, FINAL EDITION

SECTION: NEWS; Pg. A19

LENGTH: 638 words

HEADLINE: GOP members of House oppose price cap plan;

Three from Southern California vote against Feinstein on electricity

SOURCE: Chronicle Washington Bureau

BYLINE: Carolyn Lochhead

DATELINE: Washington

BODY:
Three California House Republicans voted against Sen. Dianne Feinstein's
proposal to cap electricity prices yesterday, as California Democrats warned
the
trio would pay at the polls.

???In a test committee vote, Republicans George Radanovich of Fresno, Chris
Cox
of Newport Beach and Mary Bono of Palm Springs all voted against the Feinstein
proposal, saying it would make blackouts worse.

???California Democrats had offered it as an amendment to a House bill aimed
at
ameliorating California's electricity crisis. The amendment failed 20 to 12
on a
mostly party-line vote.

???Given that there is little the federal government can do immediately to
increase power supplies to California, price controls have become the pivot
point of the debate in Washington over how to help the state.

???PRICE-GOUGING ALLEGATIONS

???Democrats, led by Feinstein, insist that federal regulators by law must
intervene when prices become "unjust and unreasonable." Not doing so, they
contend, puts California consumers at the mercy of price gouging by
wholesalers.

???Republicans argue price caps would make the situation worse by discouraging
energy generators from providing power to the state.

???The Democrats held an impromptu press conference in the hallway afterward,
accusing the Republicans of abandoning their state in its darkest hour.

???"This Republican-dominated committee said that California should drop
dead,"
said Rep. Henry Waxman, D-Los Angeles.

???"I don't know about their districts, but I'll tell you one thing, my
constituents know that they're being screwed, and they're being screwed by the
out-of-state generators, and it's up to us to stand up for our constituents,"
said Rep. Anna Eshoo, D-Atherton. "I don't know what those Republican members
are going to say when they go home."

???ANGRY GOVERNOR

???Gov. Gray Davis blasted the Republicans from Sacramento.

???"I find it very surprising that people here in California experiencing this
energy crisis can go back to Washington and vote against the best interests of
the constituents of the state," Davis said at a press conference.

???The Republicans argued the Democratic plan would have hurt California.

???"The fact of the matter is, if you put price caps on, you create a better
investment climate in Uganda than California," Radanovich said, "and I won't
vote for anything that'll keep us from solving our supply problem."

???Cox contended that price controls would do nothing to prevent blackouts
because they would not increase supply or reduce demand.

???"In many ways this is for Californians simply changing the subject from our
immediate problems of May, June and July," Cox said. "No one is contending
that
price controls will help us meet the blackout challenges."

???He also argued that because Feinstein's plan would exempt about half of
California's power suppliers from the caps, it would open the door to "further
chaos."

???EXEMPTIONS

???Feinstein's bill, co-sponsored by Sen. Gordon Smith, R-Ore., would impose
temporary price controls on wholesale Western electricity sales. But it
exempts
municipal utilities such as the Los Angeles Department of Water and Power and
big federal power marketers such as the Bonneville Power Administration in
Oregon.

???Like private generators, these providers have profited handsomely from
soaring electricity prices.

???Radanovich said the Democratic effort to force price caps was a way to
shift
the blame for the state's electricity fiasco from "a bumbling governor"
(Davis)
to President Bush.

???The overall bill was approved 17-13 by an Energy and Commerce subcommittee
chaired by Rep. Joe Barton, R-Tex., who said it "will not stop blackouts," but
could help increase power supplies this summer.Chronicle staff writer Linda
Gledhill contributed to this report. / E-mail Carolyn Lochhead at
clochhead@sfchronicle.com

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?????????????????Copyright 2001 The Chronicle Publishing Co.

?????????????????????????The San Francisco Chronicle

?????????????????????MAY 11, 2001, FRIDAY, FINAL EDITION

SECTION: NEWS; Pg. A19

LENGTH: 525 words

HEADLINE: PUC chief's proposal called petulant;

Federal agencies would pay full tab for power

SOURCE: Chronicle Political Writer

BYLINE: Zachary Coile

BODY:
The state's top energy regulator says her proposal to force federal agencies
in
California to pay "real time" prices for electricity could result in major
energy savings.

???But critics say the proposal by Public Utilities Commission President
Loretta Lynch is nothing more than a schoolyard slap at the federal government
for refusing to rein in skyrocketing wholesale energy prices.

???"It's just saying, 'You weren't nice to us, so we're not going to be nice
to
you,' " said Commissioner Richard Bilas, a Republican, who opposes the
measure.

???Lynch, a Democrat and appointee of Gov. Gray Davis, introduced the proposal
this week as part of package of rate increases to be voted on Monday, which
could jack up monthly electricity bills on heavy residential energy users by
40
percent and heavy commercial and industrial users by 50 percent or more.

???Under her proposal, federal buildings, offices and military bases -- which
account for 1.5 percent of the state's energy load -- would pay rates based on
the fluctuating price of power on the wholesale market, probably leading to
huge
increases at peak times.

???Lynch said Wednesday the plan would force federal agencies to conserve
energy. She said the measure was not meant to punish the federal government
for
not intervening in California's energy crisis.

???"It's just an experiment," she said.

???"I'm sure what Loretta is saying is, 'Put up or shut up,' " fellow
Commissioner Jeff Brown, a Democrat, who backs the idea said yesterday. "It
really puts the monkey on their back."

???Brown said federal officials had urged state regulators to raise rates,
especially during peak times, to help cut demand. Lynch's plan would put that
theory to the test on federal buildings, he said.

???Federal officials say they are conserving energy. And earlier this month
President Bush ordered all federal agencies to cut their electricity use by 10
percent.

???In California, federal agencies have slashed energy consumption by 25
percent since 1992, when Congress passed a law requiring conservation. Federal
buildings in San Francisco, Oakland and elsewhere are already dimming lights
and
setting thermostats at 78 degrees during power emergencies.

???Mary Filippini, western region spokeswoman for the General Services
Administration, which manages federal offices, warned that any jump in energy
costs would have to be passed on to taxpayers.

???Filippini also cautioned that Lynch's proposal could threaten a deal to
sell
California 12 megawatts of electricity a day from the Bonneville Power
Administration in Washington for $55 a megawatt. The deal went into effect
March
1.

???"We would have to rethink our contract with them if we had some issues with
our (energy) pricing," Filippini said.

???Even some advocates of real-time pricing say Lynch's plan to single out
federal agencies is misguided.

???"It sends the signal that real-time pricing is something to be scared of
rather than something to really pursue as a tool to help us get through the
summer," said Jim Bushnell, director of research for the University of
California Energy Institute.E-mail Zachary Coile at zcoile@sfchronicle.com.

LOAD-DATE: May 11, 2001

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?????????????????Copyright 2001 The Chronicle Publishing Co.

?????????????????????????The San Francisco Chronicle

?????????????????????MAY 11, 2001, FRIDAY, FINAL EDITION

SECTION: NEWS; Pg. A1

LENGTH: 812 words

HEADLINE: High bills may not spur conservation;

PG&E, critics agree increases are too small to change habits

SOURCE: Chronicle Staff Writer

BYLINE: David Lazarus

BODY:
Looming increases in California power bills may help replenish state coffers
but
will do little to promote conservation or reduce blackouts this summer,
consumer
activists, environmentalists and PG&E said yesterday.

???In a rare convergence of views, Pacific Gas and Electric Co. agreed with
the
utility's sharpest critics that the pending rate increases would be
insufficient
to discourage electricity use.

???While the heaviest residential power customers will see their June bills
soar by as much as 40 percent, most increases will range between 7 and 15
percent.

???"Based on our studies, residential customers will not respond to changes in
price signals of less than 20 percent," said Michael Shames, executive
director
of the Utility Consumers' Action Network in San Diego.

???"Forty percent is probably enough to send a signal," he added. "A 15
percent
increase is much less likely to have an impact."

???If so, this would undermine what state regulators say is a primary goal of
the rate increases, scheduled to be adopted Monday. Higher power bills, they
say, will result in cutbacks in power usage.

???"By promoting energy conservation during summer peak hours," said Loretta
Lynch, president of the Public Utilities Commission, "we attempt to limit
blackouts and service interruptions in order to preserve public health and
safety."

???Gov. Gray Davis, who supports the plan to hand out rebates to those who can
reduce power use by at least 20 percent, also said higher rates would lead to
conservation.

???"He thinks that if there's a financial incentive to conserve, then clearly
consumers will do it," said Steve Maviglio, a spokesman for the governor.

???'NOT GOING TO BE ENOUGH'

???The question now is whether the rate increases planned for customers of
PG&E
and Southern California Edison will do the trick.

???"They're not going to be enough," said Harry Snyder, senior advocate at
Consumers Union in San Francisco. "This amount is not going to get us the
levels
of conservation we need."

???Helen Burke, who oversees energy matters at the San Francisco Bay chapter
of
the Sierra Club, agreed that a long, hot summer of blackouts remained likely.

???"And if we get more blackouts, I'm sure the rates will have to be ratcheted
up again," she said.

???A PUC overview of how much typical PG&E bills will rise in June supports
the
idea that the impact for most consumers will be minimal.

???For example, a PG&E customer whose electricity usage is within 200 percent
of predetermined limits will see monthly bills rise 7 percent, from $95 to
$101.

???A heavier user -- within 300 percent of "baseline" limits -- will see
monthly bills climb 15 percent, from $163 to $187.

???The baseline usage figure -- included near the bottom of PG&E bills --
represents the minimal amount of power consumers require. It includes several
variables, such as climate and time of year.

???Only the heaviest users -- surpassing 400 percent of baseline -- would
experience rate increases of as much as 40 percent.

???State regulators say almost half of all residential utility customers stay
within 130 percent of baseline usage and thus would see no change in their
power
bills.

???In other words, the majority of residential customers eligible for higher
rates would see bills go up by no more than 15 percent.

???John Nelson, a PG&E spokesman, acknowledged that this amount was unlikely
to
promote widespread cuts in electricity usage.

???"Increases on the order of 7 to 15 percent probably won't accomplish much
conservation," he said.

???"The only way you're going to see significant conservation this summer is a
combination of higher prices, giving people conservation tips, and raising
awareness among consumers that we're in a crisis," Nelson said.

???Shames of the Utility Consumers' Action Network said state officials were
being less than honest when they insisted that the rate increases were meant
first and foremost as a conservation tool.

???"It's to recoup costs being incurred on the wholesale power market," Shames
said. "That's it."

???California has spent more than $6 billion since January purchasing
electricity on behalf of cash-strapped utilities.

???INCREASES TO GENERATE $5 BILLION

???The pending rate increases will raise about $5 billion in additional
revenues, which will be merged with proceeds from a $13.4 billion bond
offering
approved yesterday.

???Yet even these sums represent only a fraction of the estimated $65 billion
California will spend on electricity this year.

???"What we should be doing is raising rates a lot more," said Severin
Borenstein, director of the University of California Energy Institute in
Berkeley.

???He advocated increasing power bills this summer by as much as 75 percent
over levels paid a year ago.

???"That would get you conserving," Borenstein said.E-mail David Lazarus at
dlazarus@sfchronicle.com.

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???????????????????The Associated Press State & Local Wire

The materials in the AP file were compiled by The Associated Press. ?These
materials may not be republished without the express written consent of The
Associated Press.

????????????????????????May 11, 2001, Friday, BC cycle

?????????????????????????????8:46 AM Eastern Time

SECTION: State and Regional

LENGTH: 731 words

HEADLINE: Energy task force expected to recommend tax breaks

BYLINE: By H. JOSEF HEBERT, Associated Press Writer

DATELINE: WASHINGTON

BODY:

??The Bush administration's energy task force will recommend tax breaks to
promote conservation and develop renewable energy sources, but still focus
primarily on increasing conventional energy supplies, according to government
officials.

??The energy blueprint being unveiled next week also will call for relaxing
clean air rules to give refiners more flexibility in producing and
distributing
gasoline and ease regulatory barriers to nuclear power plant construction,
sources said, speaking on the condition of anonymity.

??Democrats and Republicans have hammered the administration in recent days
for
proposing deep spending cuts for renewable energy programs, such as solar and
wind, and in government research into technology that would increase energy
efficiency and conservation.

??Energy Secretary Spencer Abraham has defended the cuts, including slashing
solar and wind research money by 50 percent. But he suggested Thursday at a
Senate hearing that some of those funds may be restored, subject to
recommendations and priorities set by the energy task force.

??While details remained sketchy, the government sources said the task force
will recommend tax breaks for wind power projects, purchase of solar
technology,
hybrid gas-electric automobiles, research into hydrogen fuel cells, and energy
facilities using organic waste.

??Administration officials also hinted Thursday that the White House has not
categorically ruled out - as had been widely believed - some tinkering with
federal fuel economy standards for small trucks and sport utility vehicles.
However, any changes likely would be linked to a study by the National Academy
of Sciences on the impact of these standards on safety and energy savings.

??Other sources said the task force will recommend regulatory relief for
construction of nuclear power plants and tax incentives to develop
technologies
that make coal less polluting.

??Both nuclear and coal, which together account for nearly three-fourths of
the
electricity produced, are essential to meet future energy needs, the task
force
will declare. While urging expanded development of natural gas, the report
will
warn against relying too heavily on a single energy source, including natural
gas.

??Administration officials have repeatedly said they want to produce a
blueprint of a "balanced" energy plan emphasizing all sources.

??Following up on that theme, President Bush will officially unveil the policy
next Thursday at a St. Paul, Minn., plant that burns coal, natural gas, oil
and
renewable wood waste to produce both heat and electric power.

??Still, the thrust of the energy task force recommendations will be on
development of conventional fuels such as coal, oil and natural gas, and
improving electricity grids, natural gas pipelines and refining facilities.

??The task force will call for easing some regulatory barriers on oil refiners
including changes in clean air requirements to give refiners more flexibility
in
gasoline production.

??Refiners have complained that current clean air requirements force them to
produce nearly a dozen different blends of gasoline for specific regions. This
causes both production and distribution problems, they have argued in
presentations to the task force.

??It was unclear how the task force envisions eliminating the boutique
gasoline
blends, or whether the proposal would assume a waiver in some cases of a
mandatory sale of specific blends of reformulated gasoline. Reformulated
blends,
which include an oxygen additive to make it burn cleaner, account for about a
third of the gasoline sold.

??In other energy-related developments Thursday:

??-A House Energy and Commerce subcommittee rejected a Democratic proposal for
price controls on wholesale electricity sales in California. The amendment to
a
bill that takes modest actions to help California boost power supplies was
defeated, 20-12. The bill later advanced to the full committee. California
Gov.
Gray Davis said it "will do little to address our current situation."

??-Sen. Byron Dorgan, D-N.D., called for legislation to create a special
House-Senate committee to investigate soaring energy prices and what he called
industry price gouging.

??-Sen. Dick Durbin, D-Ill., said he will seek creation of a national consumer
energy commission that would give consumers a voice in the debate over energy
shortages and rising prices.

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??????????????????????????????????AP Online

????????????????????????????May 10, 2001; Thursday

SECTION: Domestic, non-Washington, general news item

LENGTH: 678 words

HEADLINE: ?California Blackout Season Begins

BYLINE: JENNIFER COLEMAN

DATELINE: SACRAMENTO, Calif.

BODY:

???California's newest season blackout season is here, and it arrived earlier
than expected.

??State officials had anticipated a crunch in June, when air conditioners are
cranked up for summer weather. But already, California has been hit with
back-to-back blackouts on Monday and Tuesday, and the operators of the state's
power grid barely scraped together enough energy to avoid blackouts Wednesday.

??''We're definitely in blackout season,'' said Michael Shames, executive
director of the Utility Consumer Action Network. ''Right now, there's almost a
disbelieving frustration that is going to elevate quickly to downright
irritable
if we go through a summer of this.''

??Grid officials expected fewer problems Thursday, when temperatures were
expected to cool slightly and a large power plant was to return to service.

??Hot weather, a high number of power plants down for maintenance and little
power available from other states led to rolling blackouts this week that
affected hundreds of thousands of customers.

??Experts expect a long, hot summer of similar drills calls for conservation,
followed by blackouts. California has had six days of rolling blackouts so far
this year, and state regulators are forecasting at least 30 more this summer.

??For consumers, the early start of the season has created a mixture of
resignation and exasperation.

??''The first day we have a hot day we have an energy crisis,'' said San
Francisco resident Dee Ann Hendrix. ''I hate to say this, but it's getting to
be
a way of life in California.''

??Fe Burian, 46, who moved to San Francisco from the Philippines, said the
blackouts had not affected her yet, ''but I come from a Third World country
so I
know how it is.''

??It has been a year since consumers in San Diego got the first dose of
shortages and higher costs. Since then, Gov. Gray Davis and other leaders have
tried to deal with the crisis with mixed results.

??The state has spent $4.7 billion since January to buy power for its two
largest cash-strapped utilities. On Wednesday, the Legislature approved the
sale
of $13.4 billion in revenue bonds to buy electricity.

??Last month, the state Public Utilities Commission approved the biggest rate
increase in California history: up to 46 percent for customers of Southern
California Edison and Pacific Gas & Electric.

??Under a plan proposed Wednesday by PUC President Loretta Lynch, the increase
would be structured so that residential customers who use the most
electricity
would face average rate hikes of 35 percent 40 percent, while industrial users
could face increases of 50 percent or more.

??In February, Davis streamlined the permit process for new power plants and
created an ambitious conservation program to head off summer blackouts.

??But the governor's plan to have 5,000 megawatts of new power online by
midsummer is unrealistic, said Michael Zenker, director of Cambridge Energy
Research Associates, an energy consulting firm.

??''There's no basis in fact in that number. We expect between 750 to 1,000
new
megawatts,'' he said. A megawatt is roughly enough power for 750 homes.

??Zenker's organization predicted several months ago that the state would see
200 days of severe shortages this summer and 20 days of blackouts. But since
then, the forecast has gotten bleaker because drought in the Northwest is
expected to reduce output from hydroelectric plants.

??''Any sort of warm weather will be enough to push us into blackouts,''
Zenker
said.

??As for conservation, it will make blackouts shorter and less severe, Shames
said, ''but it won't stop the blackouts from happening.''

??Meanwhile, a judge said Wednesday that PG&E can continue paying its natural
gas suppliers, even as other creditors wait to recoup billions of dollars from
the utility.

??The decision allows PG&E, which last month filed for Chapter 11 bankruptcy
protection, to buy gas that it sells to homes and

??usinesses.

?????(PROFILE

?????(CO:Southern California Edison Co.; TS:SCE;)

?????(CO:Pacific Gas and Electric; TS:PCG; IG:ELC;)

?????)

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??????????????????????????????????AP Online

????????????????????????????May 10, 2001; Thursday

SECTION: Washington - general news

LENGTH: 703 words

HEADLINE: ?Bush Panel to Urge Relaxed Air Rules

BYLINE: H. JOSEF HEBERT

DATELINE: WASHINGTON

BODY:

???The Bush administration's energy task force will urge relaxing clean air
requirements to help refiners meet gasoline demand, and call for tax breaks
for
some renewable energy such as wind and solar panels, according to government
sources.

??The refinery proposal is aimed at addressing a petroleum industry complaint
that federal and local air quality rules often require production of slightly
different blends of gasoline, putting added strain on the supply and
distribution systems.

??The so-called boutique blends of gasoline have been the subject of vigorous
complaints from refiners, who argue that they are not needed to meet federal
air
quality goals, but prevent shifting of gasoline supplies where they are most
needed.

??It was not clear Thursday whether the proposal would assume a waiver in some
cases of reformulated gasoline, which accounts for about a third of the
gasoline
sold nationwide. This cleaner gasoline contains an oxygen additive and is
required in areas with serious pollution problems.

??The energy task force is headed by Vice President Dick Cheney.

??Separately, the House took its first action Thursday to try to ease
California's power problems this summer, but in a subcommittee vote rejected
Democratic demands for price controls on Western wholesale electricity.

??The bill, approved by an Energy and Commerce subcommittee by a 17-13
party-line vote, ''will not stop blackouts,'' said Rep. Joe Barton, R-Texas,
its
chief sponsor, but give California some additional tools to boost supplies
this
summer.

??In a letter to Barton, California Gov. Gray Davis said the measure ''will do
little to address our current situation.'' He urged approval of price caps on
soaring wholesale electricity prices. Caps were rejected by a 20-12 vote with
solid GOP opposition including the three California Republicans on the
subcommittee.

??The Cheney task force, which will present its report to President Bush next
week, also will propose regulatory relief for construction of nuclear power
plants and tax incentives for development of technologies that make coal less
polluting.

??Both nuclear and coal, which together account for nearly three-fourths of
the
electricity produced, are essential to meet future energy needs, the task
force
will declare. While urging expanded development of natural gas, the report
will
warn against relying too heavily on a single energy source including natural
gas.

??While the energy blueprint will focus heavily on long-range plans to boost
energy supplies, the administration in recent weeks has scurried to include
additional conservation and energy efficiency measures.

??Fearing a backlash from environmentalists, Republicans and Democrats in
Congress have urged the administration to not ignore efficiency and renewable
energy sources.

??''We need a balanced approach. We need renewables and conservation,'' said
Sen. Frank Murkowski, R-Alaska, chairman of the Energy and Natural Resources
Committee, who also is an advocate for the measures to expand supplies
including
drilling in the Arctic National Wildlife Refuge.

??The task force will urge Congress to approve drilling in the refuge.

??The task force's efficiency and renewable proposals will focus heavily on
providing tax incentives including tax breaks for the development and purchase
of more fuel efficient ''hybrid'' gas-electric automobiles, residential solar
panels, wind generation, and development of hydrogen fuel cells, according to
sources who spoke on condition on anonymity.

??In other energy-related developments Thursday:

??_Senate Democrats complained that they have been ''left in the dark'' about
the administration's energy plans and should have been consulted by the Cheney
task force.

??_Sen. Byron Dorgan, D-N.D., said he will soon introduce legislation to
create
a special House-Senate committee to investigate soaring energy prices. He said
there are all the indications of price manipulation and a committee ''would
keep
the spotlight'' on the electricity and gasoline markets.

??_Sen. Dick Durbin, D-Ill., called for creation of a national consumer energy
commission that would give a voice to consumers in the debate over energy
shortages and rising prices.

LOAD-DATE: May 10, 2001

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??????????????????????????????????AP Online

????????????????????????????May 10, 2001; Thursday

SECTION: Washington - general news

LENGTH: 372 words

HEADLINE: ?House Addresses California Crisis

BYLINE: H. JOSEF HEBERT

DATELINE: WASHINGTON

BODY:

???A House subcommittee took its first action Thursday to try to ease
California's power problems this summer, but rejected Democratic demands for
price controls on wholesale electricity.

??The legislation, approved by an Energy and Commerce subcommittee on a 17-13
party-line vote, would allow California to extend Daylight Savings Time to
reduce consumption, among other provisions.

??''The federal government cannot stop blackouts,'' said the bill's chief
sponsor. Rep. Joe Barton, R-Texas. ''This legislation will not stop blackouts,
nor will it solve the supply-demand problem, but it will help.''

??But Democrats said the measure will do little to ease the power problems
this
summer in California, where supply shortages already have created sporadic
blackouts and the problems are expected to become worse in the coming months.

??As the committee voted, California went through another power emergency, its
electricity reserves falling to less than 5 percent.

??In a letter to Barton, California Gov. Gray Davis said the House bill ''will
do little to address our current situation.''

??He urged the subcommittee to cap the price on wholesale electricity, which
is
expected to cost the state $70 billion this year, 10 times greater than two
years ago.

??But the subcommittee rejected price controls by a 20-12 vote. The three
California Republicans on the subcommittee Reps. Chris Cox, Mary Bono and
George
Radanovich joined their GOP colleagues in voting no.

??The Republicans argued that price controls would hinder investment in power
plants, cause more severe electricity supply problems and stifle conservation
efforts.

??Democrats rejected those arguments.

??''It's clear they were brought into line by their leadership,'' said Rep.
Henry Waxman, D-Calif.

??Waxman vowed to pursue price caps when the measure is considered by the full
committee and on the House floor.

??President Bush opposes price controls, as have Republican leaders in both
the
Senate and House.

??''The message is, 'Help is not on the way. We will pray for you but we will
not intervene to control prices,''' said Rep. Edward Markey, D-Mass.

??____

??On the Net:

??House Energy and Commerce Committee: http://www.house.gov/commerce

LOAD-DATE: May 10, 2001

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?????????????????????????????The Associated Press

The materials in the AP file were compiled by The Associated Press. ?These
materials may not be republished without the express written consent of The
Associated Press.

???????????????????????May 10, 2001, Thursday, BC cycle

SECTION: Domestic News; Business News

LENGTH: 355 words

HEADLINE: Calif. governor signs bill authorizing $13.4 in bonds to repay
treasury for power buying

BYLINE: By DON THOMPSON, Associated Press Writer

DATELINE: SACRAMENTO

BODY:

??Gov. Gray Davis signed a law Thursday letting the state borrow $13.4 billion
to pay for electricity for three cash-starved utilities.

??Davis couldn't guarantee the 15-year bond will be enough to cover the
state's
electricity purchases. But he said the $13.4 billion price tag represents "the
best thinking of our financial analysts," and includes a reserve in case
electricity prices remain higher than expected.

??The state spent $1,900 per megawatt hour Wednesday as state grid operators
narrowly avoided a third consecutive day of blackouts, Davis said, reiterating
his call for federal price caps. Cooler weather helped the state avoid
blackouts
Thursday.

??Wednesday's costs were a record or near-record since the state purchases
began in January, said Oscar Hidalgo, a spokesman for the power-buying
Department of Water Resources.

??Davis said he hopes the state can stop buying power for Pacific Gas and
Electric, Southern California Edison and San Diego Gas and Electric by the end
of next year.

??Davis accused Assembly Republicans of putting their political opposition
above the state's welfare by refusing to support the bond bill. That means the
bonds can't be issued for three months, which Davis said will drive up the
interest ratepayers will be charged for the bond.

??"This measure is a lifeboat that allows us to stay afloat," he said.

??In a statement, Assembly GOP Leader Dave Cox called the bond bill "a
dangerous gamble for California - a gamble Republicans couldn't support
without
a clear endgame ... The governor obviously believes that history will judge
that
his was the right decision. He had better be right."

??Also Thursday, a federal bankruptcy judge considered ordering PG&E to make
millions of dollars in back payments to small power plant owners that provide
nearly a third of California's electricity.

??And California power regulators continued struggling over how to divide
record electric rate increases among the 9 million customers of the state's
two
largest utilities, Edison and PG&E. The Public Utilities Commission is rushing
to adopt the higher rates Monday.

GRAPHIC: AP Photos SC104-05

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???????????????????The Associated Press State & Local Wire

The materials in the AP file were compiled by The Associated Press. ?These
materials may not be republished without the express written consent of The
Associated Press.

???????????????????????May 10, 2001, Thursday, BC cycle

SECTION: State and Regional

LENGTH: 467 words

HEADLINE: PG&E says fewer small power plants offline

BYLINE: By KAREN GAUDETTE, Associated Press Writer

DATELINE: SAN FRANCISCO

BODY:

??Only eight of the 300 small power plants in Pacific Gas and Electric Co.'s
territory remain shut down for payment reasons, the struggling utility says.
That means more vital megawatts have come back online that could help prevent
rolling blackouts.

??But operators of those so-called qualifying facilities say that's because
they're required to run their plants during periods of high demand to get
paid,
not because of a change of heart over millions of dollars owed to them for
past
electricity deliveries.

??"What I believe will start happening is you will see QFs operate for a
minimal amount of time during peak times in order to get their capacity
payments," said Jan Smutney-Jones, executive director of the Independent
Energy
Producers. "They won't be fully available to California."

??All eight of the plants in PG&E's territory are natural gas-fired plants
that
deliver a combined 109 megawatts of electricity, enough to power about 80,000
homes.

??Lorie O'Donley, a spokeswoman with the Independent System Operator, which
manages California's electric grid, said that more of so-called qualifying
facilities had indeed come back online throughout the state.

??"Right now we have 1,400 megawatts offline statewide," O'Donley said, though
she didn't yet know how many QFs were offline in PG&E's territory and in other
territories.

??QFs harness solar, biomass, geothermal or wind power, as well as natural
gas,
to generate environmentally friendly electricity, and provide electricity to
the
state's investor-owned utilities under contract.

??QFs contribute about 6,000 megawatts to the state's power grid, O'Donley
said. A few weeks ago, around 3,000 megawatts were offline. Many plants were
shut down in protest for not getting paid millions of dollars for past
electricity deliveries. That lack of power contributed to rolling blackouts
which swept the state.

??The past debt, as well as a new pricing system ordered by the Public
Utilities Commission, would force QFs to operate at a loss if they start
producing power at full capacity, said Smutney-Jones.

??The new PUC price structure ties how much they can charge for their
electricity to the price of natural gas coming in at the Oregon border, where
natural gas is cheaper. However, many plants can only ship and buy their gas
at
the Topock border in the south, where prices are much higher.

??"I don't think we're anywhere near out of the woods with respect to the QF
issue," Smutney-Jones said.

??PG&E and Southern California Edison Co. have paid for QF electricity
delivered since April under order by the PUC. However, PG&E had made partial
payments on deliveries since last year, while SoCal Edison had paid nothing.
San
Diego Gas and Electric Co. says it never fell behind on its payments.

??---

??http://www.pge.com

LOAD-DATE: May 11, 2001

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???????????????????The Associated Press State & Local Wire

The materials in the AP file were compiled by The Associated Press. ?These
materials may not be republished without the express written consent of The
Associated Press.

???????????????????????May 10, 2001, Thursday, BC cycle

SECTION: State and Regional

LENGTH: 570 words

HEADLINE: Governor signs bill authorizing $13.4 in bonds to repay treasury

BYLINE: By DON THOMPSON, Associated Press Writer

DATELINE: SACRAMENTO, California

BODY:

??Gov. Gray Davis said Thursday he will travel the state if necessary to
defend
his decision to spend billions of state dollars on electricity for two
cash-starved utilities.

??The state spent nearly $2,000 a megawatt hour Wednesday as state grid
operators narrowly avoided a third consecutive day of blackouts, Davis said,
reiterating his call for federal price caps.

??The $1,900 is a record or near record since the state purchases began in
January, said Oscar Hidalgo, a spokesman for the power-buying Department of
Water Resources. The $319,200 the department paid Reliant Energy for 168
megawatt hours at that price was enough to power 168,000 homes for an hour,
Hidalgo said.

??Reliant spokesmen did not return telephone messages from the Associated
Press
Thursday.

??The governor's comments came as he signed a law letting the state borrow $
13.4 billion to repay the treasury for its power costs.

??Davis couldn't guarantee the 15-year bond will be enough to cover the
state's
electricity purchases. However, he said the $13.4 billion price tag represents
"the best thinking of our financial analysts," and includes a reserve in case
electricity prices remain higher than expected.

??He said he hopes the state can stop buying power for Pacific Gas and
Electric, Southern California Edison and San Diego Gas and Electric by the end
of next year.

??Davis accused Assembly Republicans of putting their political opposition
above the state's welfare by refusing to support the bond bill. That means the
bonds can't be issued for three months, which Davis said will drive up the
interest ratepayers will be charged for the bond; complicate the state's
budget;
and endanger worthwhile state programs that will be delayed until the bonds
can
replenish the state treasury.

??"This measure is a lifeboat that allows us to stay afloat," Davis said.

??"By refusing to vote for this measure, Republicans are playing with fire,"
Davis said. "If I have to go into every district occupied by a member who
voted
against (the bond issue) and make the case why this is necessary, that is
what I
will do."

??Assembly GOP Leader Dave Cox, R-Fair Oaks, called the bond bill "a dangerous
gamble for California - a gamble Republicans couldn't support without a clear
endgame."

??"The governor obviously believes that history will judge that his was the
right decision," Cox said in a statement. "He had better be right."

??Assembly Speaker Robert Hertzberg, D-Van Nuys, said he still hopes to
negotiate a bond compromise with Republicans, but Cox said Republicans' offers
to negotiate had been ignored.

??Republicans had proposed that $5 billion of the state's power purchases be
paid by taxpayers, lowering the amount of money that will be billed to
investor-owned utilities' customers over the next 15 years.

??Meanwhile Thursday, a federal bankruptcy judge considered ordering PG&E to
make millions of dollars in back payments to small power plant owners that
provide nearly a third of California's electricity.

??And California power regulators continued struggling over how to divide
record electric rate increases among the 9 million customers of the state's
two
largest utilities, Edison and PG&E. The Public Utilities Commission is rushing
to adopt the higher rates Monday.

??While tempers and blood pressures rose, cooler temperatures helped the state
avoid the threat of blackouts Thursday.

GRAPHIC: With AP Photos SC104-105

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???????????????????The Associated Press State & Local Wire

The materials in the AP file were compiled by The Associated Press. ?These
materials may not be republished without the express written consent of The
Associated Press.

???????????????????????May 10, 2001, Thursday, BC cycle

SECTION: State and Regional

LENGTH: 754 words

HEADLINE: Developments in California's energy crisis

BYLINE: By The Associated Press

BODY:

??Developments in California's energy crisis:

??THURSDAY:

??- Grid operators say cooler temperatures are helping them meet California's
electricity demands. Officials at the Independent System Operator declare a
Stage 2 emergency, meaning the state is within 5 percent of running out of
power, but say they don't expect blackouts.

??- The state Assembly and Senate give final approval to a bill expediting
power plant siting. The bill now goes to the governor for his signature.

??- The California Public Utilities Commission holds a public hearing on the
proposed rate structure in Sacramento. Two proposals are on the table for
consideration Monday: Each would make businesses and farms pay the most, while
shielding most residential customers.

??- Gov. Gray Davis signs a bill authorizing $13.4 billion in revenue bonds to
pay for power for customers of the state's three largest utilities. The bonds
will repay the state general fund for $6.7 billion authorized for power buys
since January and will finance future electricity purchases. Davis says he
will
travel the state if necessary to defend the state power buys.

??- State officials reveal they spent a record or near-record $1,900 per
megawatt hour Wednesday to avoid a third consecutive day of rolling blackouts.
The $319,200 the state paid Reliant Energy for 168 megawatt hours at that
price
was enough to power 168,000 homes for an hour,

??- Owners of small power plants ask U.S. Bankruptcy Judge Dennis Montali to
order PG&E to release them from contracts to provide it electricity. Montali
decides to wait until May 24 to make a decision.

??- The California Energy Commission licenses two power plants that should be
able to deliver 545 megawatts by late summer: a 450-megawatt power plant
retooling project in Huntington Beach and a 95-megawatt summer reliability
project in Hanford.

??- A U.S. House subcommittee votes to allow California to extend Daylight
Savings Time to reduce consumption, among other provisions. But it rejects
Democratic demands for price controls on wholesale electricity-prices on a
party-line vote.

??- Inspectors from the PUC and Independent System Operator, which runs the
state's power grid, make their first check of a reported power plant outage
under a policy announced Wednesday by Davis to verify generators aren't
artificially withholding electricity to drive up power prices. They find that
a
750 megawatt Bay Area plant operated by Mirant Corp. is legitimately down for
repairs, but is expected to return to service Sunday.

??- Edison International stock closes at $8.91, down 3 cents. PG&E Corp.
gained
a dime to close at $9.10.

??WHAT'S NEXT:

??- Residents of Mesa Verde and Blythe say they will protest the
groundbreaking
ceremony Friday for the Blythe Energy Project, a 520 megawatt natural gas
power
plant.

??- Sen. Don Perata, D-Oakland, and Oakland school officials introduce
legislation to ease the burden of high energy prices on schools and the
disabled.

??- Davis' representatives continue negotiating with Sempra, the parent
company
of San Diego Gas and Electric Co., to buy the utility's transmission lines.

??- The PUC hears oral arguments on its proposals for how to allocate record
rate increases.

??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.

??Edison and PG&E 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 two 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 rate increases of as much as 46
percent on average to help finance the state's multibillion-dollar power buys.
The PUC is still determining how those increases will be spread among utility
customers.

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????????????????Copyright 2001 Burrelle's Information Services

?????????????????????????????CBS News Transcripts

?????????????????????SHOW: CBS EVENING NEWS (6:30 PM ET)

????????????????????????????May 10, 2001, Thursday

TYPE: Newscast

LENGTH: 398 words

HEADLINE: CALIFORNIA BUSINESSES SUFFERING UNDER RATE INCREASES AND ROLLING
BLACKOUTS

ANCHORS: DAN RATHER

REPORTERS: JERRY BOWEN

BODY:

??DAN RATHER, anchor:

??With or without federal help, Californians will--will be paying for this
energy emergency for at least 15 years. ?I'll take--it'll take that long to
pay
off the largest municipal bond issue in US history, authorized by a bill
signed
into law today. ?But as CBS' Jerry Bowen reports from California, some have
much
more immediate problems.

??JERRY BOWEN reporting:

??There's no escaping California's energy nightmare, not on the irrigated hay
fields north of Los Angeles.

??Mrs. JULIE KYLE: That's the cause of our trouble.

??BOWEN: Gailen and Julie Kyle's fields that rely on water pumps to keep them
green, electric pumps bleeding the Kyles' finances dry at roughly $ 40,000 a
month. ?And now there's talk of bigger rate hikes, as much as 60 percent.

??Mrs. KYLE: They are putting an end to our way of life. ?And you can't just
say, 'OK, well, tomorrow I'll go to work somewhere else.' What are we going to
do?

??BOWEN: The Kyles are interruptible customers, first to get their power cut
in
exchange for lower rates. ?It's happened 26 times so far this year.

??Mr. GAILEN KYLE: We've had all sorts of problems in the past, but nothing
that could put us out of business like this.

??BOWEN: No escaping the frustration either at this carpet factory in south LA
County.

??Mr. JOHN BRADFORD (Interface Americas Inc.): The fear of the rolling
blackout
is serm--is something that we always are--are dealing with.

??BOWEN: John Bradford has already moved some crews from day to night shifts,
when power's always available. ?Now what he wants is notice of a blackout,
just
a five-minute warning.

??Mr. BRADFORD: That gives us the opportunity to shut down the machines that
are--could be safety issues during a shutdown or that could actually break
components in a machine.

??BOWEN: Today, California's governor signed a measure selling a record $ 13.4
billion in revenue bonds to buy more power. ?This after failing to convince
energy wholesalers to shave their bills, accept 70 cents on the dollar for
what
they're already owed.

??Governor GRAY DAVIS (Democrat, California): In my view, they would be asked
to take a haircut. ?I thought everyone should share the pain.

??BOWEN: It's the new way of life in California, and energy officials are
forecasting at least 30 more days of blackouts for the summer. ?Dan.

??RATHER: Jerry Bowen in Los Angeles.

LOAD-DATE: May 11, 2001