Please see the following articles:

Sac Bee, Thurs, 5/31:  A rush to duck power outages: About half of the
state's electric users already have been exempted from rolling blackouts

SD Union, Thurs, 5/31:  Sempra chief: County may fare OK on outages

SD Union, Thurs, 5/31:  'Plan B' gains key support in Assembly

SD Union, Thurs, 5/31:  FERC boss unfazed by Davis' lawsuit threat

SD Union, Thurs, 5/31:  Chula Vista names itself a municipal power entity

SD Union (AP), Thurs, 5/31:  Circuit breaker
Giddy investors in the power trade get their wires crossed

SD Union (AP), Thurs, 5/31: After months of pressure, mayor agrees on power
plant

SD Union, Wed, 5/30:  Panel OKs weakened utility district bill

SD Union, Wed, 5/30:  Davis fails to sway Bush on price caps

SD Union, Wed, 5/30:  Head of FERC confident California suit will fail

SD Union (AP), Wed, 5/30: Grid managers call Stage 2 alert, but hope to avoid
blackouts

LA Times, Thurs, 5/31: FERC Chief Unfazed By Threat of Third Lawsuit

LA Times, Thurs, 5/31:  The Home Energy Drain

SF Chron, Thurs, 5/31:  Heat's on, but so are lights
100-degree temperatures aren't widespread, sparing the grid

SF Chron, Thurs, 5/31: Municipal utilities warned
Governor says he'll seize excess electricity if prices don't come down

SF Chron, Thurs, 5/31: Regulators want state trade-off for caps
Davis asked to give up control of power lines

SF Chron, Thurs, 5/31:  Plan would have biggest customers pay Edison's debt

Mercury News, Thurs, 5/31:  San Jose mayor changes course, endorses power
plant

Mercury News, Thurs, 5/31:  State admits power-deal secrecy

Mercury News, Thurs, 5/31: California Gov. Davis blasts Bush energy policy

Mercury News, Thurs, 5/31: Mayor sees the light on power plant  (Editorial)

OC Register, Thurs, 5/31: Building a new plant? More power to them

OC Register, Thurs, 5/31:  Watering down fun
Many summer activities in O.C. will be diminished by the electricity crunch

OC Register, Thurs, 5/31:  Energy notebook
San Jose mayor switches position, backs power plant

OC Register, Thurs, 5/31: Deadline near on regional power grid

OC Register, Thurs, 5/31:  Bush standing tall as Davis plays blame game
(Commentary)

Individual.com (Businesswire), Thurs, 5/31: Electrical Emergency Stepped Up
to Stage Two;
Need for Energy Conservation is Critical

Individual.com (AP), Thurs, 5/31:  Washington's Role Helped Spark
California's Power Crunch

Individual.com (Businesswire), Thurs, 5/31:  Energy Experts Say Solution to
California Crisis is
Inescapable/ Build More Power Plants and Ensure Competition

NY Times, Thurs, 5/31: In California, Blackouts Spur A Search for Home
Remedies

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A rush to duck power outages: About half of the state's electric users
already have been exempted from rolling blackouts.
By Carrie Peyton, Terri Hardy and Clint Swett
Bee Staff Writers
(Published May 31, 2001)
Up and down California, businesses, government agencies, campuses and others
are scrambling to join the millions who will escape this summer's predicted
waves of rolling blackouts.
Some have gotten state regulators to change blackout rules. Some have given
different versions of their needs to utilities, changing their stories in
ways that satisfy exemption standards. Some have persuaded legislators to
propose laws just for them.
"People that have political power or economic power are going to find ways of
getting exempted. It happens all the time," said Richard Bilas, one of five
appointed members of the state Public Utilities Commission.
Every addition to the largely confidential list of those exempt from outages
boosts the frequency of blackouts for everyone else.
While a few thousand institutions -- including hospitals, fire departments
and prisons -- are deemed "essential" users who should not be blacked out,
nearly half the state is spared outages because millions more share circuits
with those exempt facilities.
In Sacramento, for example, the electric utility will not cut power to a
water treatment facility along the American River for fear of endangering
water quality. But sheltering that circuit also spares the sprawling
California State University, Sacramento, campus nearby.
If exemptions grow, "at some point, you lose the ability to reliably have
rolling blackouts," said PUC commissioner Carl Wood. He has estimated that
fewer than 1,000 more institutions can be exempted without compromising the
system that rolls outages from one part of the state to the next when the
electric grid can't supply power for everyone.
With close to half of the state sitting out outages, "that means the other
half is going to get blacked out twice as often. It's basically unfair to the
rest of the community," said Paul Perkovic, who sits on the board of the
Montara Sanitary District, which provides sewer, garbage and other services
to a San Mateo County community.
Perkovic urged the PUC last week to make more government agencies, including
his tiny district, eligible for blackouts, arguing that they should be
prepared for other emergencies anyway.
The deluge of exemption requests has created a dilemma of values and numbers.
Should nursing homes be placed on the essential list? What about outpatient
surgical clinics or transit agencies or schools? And when, if ever, should
someone review existing exemptions to see if they're still needed?
Utilities and regulators say they try to apply the rules fairly. But
inconsistencies appear, and the rules keep changing as the realization sinks
in that many more blackouts could await California.
The state's two biggest utilities are close in size, but one shields about 25
percent more customers than the other from outages.
The Sacramento Municipal Utility District, which sets its own outage
standards, exempts only 21 of its 530,000 customers.
Pacific Gas and Electric Co., which applies rules set by the PUC, is much
more generous, giving 2,600 of its 4.8 million customers the "get out of
blackouts free card."
Southern California Edison is even more open handed in its interpretation of
the same rules, doling out 3,600 exemptions among its 4.3 million customers.
The roads to getting an exemption are varied. There are at least three places
to start for those who want to stay cool and bright when all around are going
dark.
Businesses or governments can apply to their utility, which determines
whether they fit rules for a public safety exemption.
Or if their utility is regulated by the PUC, they can apply directly to a new
program set up to examine their petition for exemptions.
Finally, they can go to the state Legislature, where lawmakers have
introduced a range of bills that would protect schools, nursing homes,
refineries -- even Universal Studios.
But in the attempt to quickly piece together a system to grant exemptions,
critics say, a haphazard process has been developed.
Dan Johnson, associate vice president for facilities development and
operations at San Jose State University, said he has sought an exemption from
PG&E and is still waiting, while campuses with similar circumstances have
succeeded. Now he wonders about the fairness of what seems to him a murky
decision-making process.
"Each utility has its own way of dealing with exemptions," he said. "If it
appears that the decision is arbitrary and capricious, we hope that when we
appeal to the PUC some sanity prevails."
One person in PG&E's tariff's department has done nothing but process
exemption requests since March, officials said, after the job became too big
to be absorbed in another worker's duties.
About 200 requests have come in since early this year, and PG&E has approved
45 of them and denied 72, with 79 still pending.
The process is aimed at being a straightforward evaluation of whether an
entity fits into existing PUC categories of "essential" customers.
But it isn't always that simple, said Roland Risser, PG&E director of tariffs
and compliance.
Sometimes, said Risser, a customer will say it has adequate backup
generation, and PG&E will let the customer know the backup disqualifies it
from an exemption. Later, the customer calls back and says "we've
re-evaluated" and the backup generator won't supply all its needs.
"We just take their word for it," Risser said. "We don't police."
From universities to transit agencies, a wide range of customers worry that
as different utilities apply PUC standards, those regulations don't always
yield the same results.
So far, at least eight campuses within the University of California and CSU
systems will not be subject to rolling blackouts, including UC Davis.
In a letter to PG&E asking for an exemption, UC Davis stressed the potential
danger to animals in its veterinary hospital and the possible destruction of
research. But PG&E spokesman Ron Low said health and safety arguments are the
only ones that matter. PG&E granted the exemption because the campus does not
have generators for its airport and its radio station -- which is part of the
emergency broadcasting network.
Transportation officials say they're frustrated by the mixed signals sent by
utilities.
While the PUC has declared the Bay Area Rapid Transit District exempt from
blackouts, Edison says Los Angeles' Municipal Transportation Authority is
not. Ralph de la Cruz, deputy executive director of operations for the MTA,
doesn't understand that logic. True, BART travels under the bay. But the
MTA's Green Line runs down the middle of the I-105 Century Freeway. Some MTA
rail lines are elevated, and passengers trying to extricate themselves from a
stalled train could plunge to the ground.
The MTA asked Edison to reconsider and has appealed to the PUC.
"We are anxious to see this resolved as quickly as possible, before blackouts
occur," de la Cruz said. "My God, we don't want to be in the position of our
lines experiencing the prospect of stranded passengers."
The San Francisco Giants also have appealed to the PUC to be exempt during
games. A blackout at Pacific Bell Park would "pose major operational
challenges," said Staci Slaughter, a Giants' spokeswoman.
Electric turnstiles wouldn't work. Concession stands could only accept cash
only for hot dogs and beers. The field would go dark and night games would
have to be canceled.
The PUC has been so swamped with bids to escape blackouts that it has hired a
scientific and engineering consulting firm to study who else should be added.
Meanwhile, it has asked utilities to look into ways to reconfigure the wiring
so that each essential customer won't take so many nonessential ones out of
the blackout pool. A report on those efforts is due Friday.
"We've been deluged at the commission by individual requests that do have a
broader public policy good," said PUC president Loretta Lynch, including one
from the lone U.S. maker of a blood-clotting agent for hemophiliacs.
The PUC has hired Exponent, a Menlo Park consulting firm, for $615,000 to
analyze who else should be exempt.
Exemption applications are due Friday and will be reviewed by people with
specialties ranging from toxicology to environmental sciences to electrical
engineering, said Robert Caligiuri, an Exponent vice president.
The company will rank applicants based on safety risks, and it will work with
utilities to determine the potential impacts of adding each one to the
exemption pool. It will report to the commission in July, and Wood expects a
decision in early August. He hopes the new rules can be implemented by
utilities soon after.
But no one within the PUC is taking an equally rigorous look at those who are
already exempt, and the commission is split on whether such a study is
necessary. Wood, who specializes in the blackout issue, believes that the
commission simply doesn't have the time for such an effort during the current
emergency.
Unsure of their prospects with utilities or the PUC, some are taking their
cases to the Capitol.
State Sen. Sheila Kuehl, D-Santa Monica, said lawmakers are scrambling to
draft energy policies that help all Californians, and at the same time, look
after interests in their districts.
One example is Kuehl's bill that would allow 15 businesses -- including
Universal Studios -- which straddle the boundary between Edison and the Los
Angeles Department of Water and Power to get their electricity from DWP. Not
only would that deal provide them with cheaper rates, but it would likely
exempt them from blackouts.
The Los Angeles city utility is not part of the region controlled by the
state Independent System Operator, and so it functions independently when the
ISO orders utilities to impose blackouts.
Kuehl said the proposal is fair because those businesses were harmed by a
"geographic quirk," where parts of the park are in DWP territory but they are
solely an Edison customer.
"These are already DWP customers," Kuehl said. "They should be able to draw
all their energy from DWP."
Other lawmakers are carrying bills for public schools, oil refineries and
customers in areas where there are extreme temperatures. Sen. Richard
Polanco, D-Los Angeles, is proposing a law that would ensure municipal
utilities -- such as his district's DWP -- don't have to participate in
blackouts.
Sen. Debra Bowen, D-Marina del Rey, chairwoman of the Senate energy
committee, said the state has to realize that not everyone can be exempt.
"All these bills that seek to put one group of folks in a better position
than someone else do is Balkanize the issue," Bowen said. "Unfortunately,
instead of having people come together to try and share the pain equally,
we're seeing folks rushing for their own lifeboat without regard for who gets
thrown overboard in the process."

The Bee's Carrie Peyton can be reached at (916) 321-1086 or
cpeyton@sacbee.com.

Sempra chief: County may fare OK on outages

By Kristen Green
UNION-TRIBUNE STAFF WRITER
May 31, 2001
San Diego County may be more insulated from blackouts this summer than the
rest of the state, the chief executive officer of Sempra Energy said
yesterday.
Stephen Baum said power supply shortages aren't as profound in Southern
California, in part, because the capabilities for importing energy are
better.
And that might mean Northern Californians will face more days in the dark
than San Diegans over the next three months, he said.

In a lecture at University of California San Diego yesterday, Baum, who
oversees San Diego Gas & Electric's parent company, said the state will
probably have at least 30 days of rolling blackouts this summer, an estimate
often repeated by other energy experts.
But Baum hopes to limit San Diego County energy outages by introducing a
rolling blackout reduction program. Sempra is asking the state to support the
program, which would give San Diego County credit for the energy that
businesses contribute to statewide energy supplies when electricity reserves
drop dangerously low.
Local companies would turn on generators as the state nears blackouts, which
would make more energy available. In return, Sempra asks that the state
reduce the number of households that would be blacked out in San Diego
County. The state Public Utilities Commission has not considered the idea
yet.
State officials, however, have suggested that the program be applied
statewide. That would mean San Diego County businesses that run generators
would contribute to the state's energy supply, but the number of local
residents impacted by blackouts would not shrink.
During the afternoon lecture, attended by about 30 UCSD students and
visitors, Baum acknowledged the significance of President Bush's visit
Tuesday but said he disagrees with Bush's opposition to price caps.
And he expressed frustration that a resolution seems so far off.
"I see no leadership in this issue," he said.
The lecture was sponsored by the Irwin and Joan Jacobs School of Engineering,
the Graduate School of International Relations & Pacific Studies, and the
Center for Energy Research.

'Plan B' gains key support in Assembly

Lawmakers also want state costs on energy to be fully disclosed
By Ed Mendel?
UNION-TRIBUNE STAFF WRITER
May 31, 2001
CALIFORNIA'S POWER CRISIS

SACRAMENTO -- Assembly Democratic leaders have decided to back an alternative
to Gov. Gray Davis' plan to keep Southern California Edison out of bankruptcy
that places less emphasis on state purchase of the Edison transmission
system.
The long-awaited "Plan B" from Assembly Speaker Robert Hertzberg, D-Van Nuys,
is taking shape as legislative leaders are demanding that the governor reveal
detailed information about state power purchases, which total more than $7
billion.
"You can't come to a solution of this problem until you know exactly what the
Department of Water Resources is spending," said Senate President Pro Tempore
John Burton, D-San Francisco.
A Davis spokesman said the administration expects to begin complying with the
legislators' request soon. But there is a question about whether standard
confidentiality clauses prevent release of long-term contracts and concern
that revealing daily purchases would result in higher prices.
"The governor philosophically wants to release them as soon as possible,"
said Steve Maviglio, Davis' press secretary. "We just want to make sure we
don't adversely affect our ability to get power at lower cost for the
summer."
Reserve power levels dropped yesterday, and the state power grid operator
declared a Stage 2 alert for the first time in three weeks. The Independent
System Operator said some power plants were off-line for maintenance and hot
weather across the state increased demand. Fewer imports were available
yesterday in comparison to last week.
Another reason legislative leaders are pushing for a full disclosure of state
spending on power is to help the Legislature prepare a new state budget for
the fiscal year that begins July 1.
"There are many reasons that having very precise numbers in that regard are
important to Sen. Burton and the speaker," said Assemblyman Fred Keeley,
D-Boulder Creek, who has been active on the power issue in the Legislature.
Keeley said disclosure of power spending costs might encourage Republican
legislators to provide an urgency vote allowing the prompt sale of a bond of
up to $13.4 billion to repay the state general fund for the power purchases.
Without an urgency vote the state cannot begin issuing the massive bond
before late August, nearly two months into the new fiscal year. The bond
would be paid off by ratepayers over 15 years.
In addition, said Keeley, detailed information about state spending might
also lead to an agreement on legislation sought by Republicans that would
allow "direct access" purchase of electricity, where businesses and other
consumers contract with generators and marketers.
The state began buying power for utility customers in January after a failed
deregulation plan, which froze customer rates as power costs soared, resulted
in a combined $13 billion debt for Edison and Pacific Gas and Electric and
left them unable to borrow.
After PG&E went into bankruptcy in early April, Davis quickly completed a
memorandum of understanding to purchase the Edison transmission system for
$2.76 billion as part of a plan to keep Edison out of bankruptcy and able to
resume buying power for its customers by the end of next year.
But Republican legislators immediately opposed the state purchase of the
transmission system. Democratic legislators think the plan is too generous
for Edison and are reluctant to approve what consumer groups have called a
"bailout" of the utility.
Burton said that before legislators can evaluate an alternative to the
governor's plan they need to know how much the state power purchasing agency,
the Department of Water Resources, is spending and how much money has been
committed for the future.
"Until we can find that out it's kind of tough to plan," Burton said.
Speaker Hertzberg has asked Keeley and senior Assembly staff members to
prepare the documents for an alternative to the governor's plan that
Hertzberg is expected to propose in a few days.
"The transmission purchase is not featured as prominently as it was in the
governor's proposal," Keeley said.
One of the options considered by the Assembly Democratic "Plan B" group was a
proposal by Assemblymen John Dutra of Fremont and Joe Nation of San Rafael
that would give the state the option of purchasing the Edison transmission
system for $1.2 billion within five years.
A key part of both the governor's plan and the Dutra-Nation proposal is
giving Edison part of the revenue from monthly utility bills, a "dedicated
rate component," that could be used to pay off Edison's debt and allow the
utility to resume buying power.
Both plans also would require Edison to make other concessions, including
providing low-cost power and the return of a $400 million tax refund that
Edison gave to its parent firm. Generators would be asked to forgive 30
percent of what they are owed.
Assembly Republicans said last week that what the state should receive in
exchange for aiding Edison is not the transmission system, but an agreement
that Edison would build new power plants to provide low-cost power.

FERC boss unfazed by Davis' lawsuit threat

Court has dismissed similar action already
By Toby Eckert
COPLEY NEWS SERVICE
May 31, 2001
WASHINGTON -- The head of the Federal Energy Regulatory Commission said
yesterday he is confident the agency would prevail in a legal battle with
California Gov. Gray Davis over electricity price controls.
"I feel good about our chances," said FERC Chairman Curtis Hebert, citing a
federal court's decision Tuesday to dismiss a similar lawsuit filed by
California legislative leaders.
Davis has threatened to sue the FERC for allegedly failing to meet its legal
obligation to ensure that wholesale power costs are "just and reasonable."
Such a move would be the latest escalation in Davis' running battle with the
agency over its response to California's power crisis.
"I think the 9th Circuit (federal appeals court) made very clear that the
commission is doing its job appropriately," Hebert told reporters.
A three-judge panel of the San Francisco-based court rejected a suit by
California Senate President Pro Tempore John Burton and Assembly Speaker
Robert Hertzberg that sought to force the FERC to impose wholesale price
controls. The court said the lawmakers "have not demonstrated that this case
warrants the intervention of this court."
Davis says his administration has laid a firmer legal foundation for a
lawsuit by first pursuing administrative remedies at the FERC. Several state
agencies made a flurry of filings with the commission last week, asking it to
crack down on wholesale prices that have increased tenfold over the past
year.
"The (legislative leaders') lawsuit was thrown out .?.?. because there wasn't
a preliminary filing with FERC asking for the relief that the plaintiffs went
into court to seek," Davis said Tuesday. "We have made such filings as
recently as Friday. .?.?. So we have to give them some time to review that
information."
But legal experts said the state may have a tough time building a successful
case against the FERC.
Federal statutes generally "give a great deal of discretion to agencies in
carrying out their duties," said Peter Shuck, an expert in regulatory policy
at Yale Law School. "So it would be very hard for the state to prevail."
Hebert and fellow Commissioner Linda Breathitt have rejected the firm price
controls sought by Davis, overruling Commissioner William Massey, who favors
them.
Hebert says the commission has taken steps to lower wholesale power prices in
California and punish price gouging. He cites $125 million in refunds
recently ordered by the agency and a "price mitigation" plan that went into
effect Tuesday.
The plan will use a complicated formula to set a price ceiling for power
sales during severe shortage periods. Generators breaching the limit will
have to justify their prices to the FERC or pay refunds.
Davis and other critics say the plan is riddled with loopholes and will bring
little relief to the state. They also say the refunds ordered by the FERC to
date fall far short of the billions of dollars in overcharges the state has
endured.
Meanwhile, a spokesman for the California Independent System Operator, which
controls most of California's power grid, said the agency intends to meet a
Friday deadline for filing comments with the FERC on joining a regional grid
management organization. The FERC has threatened to revoke the limited price
curbs if the ISO fails to present a plan for joining the organization.

Chula Vista names itself a municipal power entity

Move is latest effort to combat energy crisis
By Amy Oakes
UNION-TRIBUNE STAFF WRITER
May 31, 2001
CHULA VISTA -- The city has declared itself a municipal utility district as
one possible way to cope with the state's crippling energy crisis.
The declaration, approved by the City Council on Tuesday, is the city's first
step in examining the costs and benefits of owning and operating all or part
of an energy generation and distribution system.
"It's a fairly simple act in a complex environment," Assistant City Attorney
Glen Googins told the council.

The council also approved an energy conservation and strategy plan, which
outlines eight options for the city to review. The choices, range from
entering into a fixed-price contract with an energy service provider to
partnering with a third party, such as Duke Energy, to operate a power
generation facility.
The council also voiced concerns about a proposed 62.4 megawatt peak-use
plant to be built near Main Street. Ramco Inc., which wants to build an
enclosed gas turbine plant, held a site tour and information meeting Tuesday
evening.
If approved by the California Energy Commission, the plant would be
operational by Sept. 30.
The city has scheduled its own informational public hearing for residents
from 6 to 8 p.m. Friday at the Otay Community Center, 1671 Albany Ave.
Several on the council said another plant could harm the air quality in the
city because the peak-use facilities primarily use natural gas.
The city is home to Duke's South Bay facility and has approved plans for a
49.5 megawatt peak-use plant near Main Street.
"We think another peaker plant is a little much," Councilwoman Patty Davis
said yesterday. "I think Chula Vista has done its job."
Davis said the council had not received any information about the Ramco
project. She said she learned about the proposal Tuesday before the council
meeting.
By naming itself a municipal utility district, the city can consider
establishing and operating public works for its residents, such as water
distribution. The decision does not commit the city to providing those
services.
The council on Tuesday also approved using $50,000 from its traffic signal
fund to install backup battery power supply packs and light emitting diodes
at 55 intersections. The battery packs will ensure that the traffic lights
will function if the area is subject to a rolling blackout.

Circuit breaker

Giddy investors in the power trade get their wires crossed
By Brad Foss
ASSOCIATED PRESS
May 31, 2001
NEW YORK -- Investors in power companies who were sipping champagne after
President Bush unveiled his national energy strategy got a bad case of the
hiccups when Democrats regained control of the Senate.
Shares of companies that trade power climbed higher in the days following the
release of the Bush plan. They've been sliding since Sen. James Jeffords of
Vermont defected from the Republican Party, and Wall Street analysts say
perceptions about the fate of the Bush plan are definitely a factor.
"The energy bill was so favorable it almost seemed like (power companies) got
everything they would have asked for," said Barry Abramson, utility analyst
at UBS Warburg. "Now it looks like everything is going to be more difficult
to achieve, but not impossible."
The Bush plan seeks to give oil and gas drillers easier access to public
lands, to speed up the review process for refinery and power plant expansions
and spur renewed interest in nuclear power.
Shares of Calpine, Dynegy, Mirant and San Diego-based Sempra Energy, climbed
between May 16 and May 21 -- the time between the release of the Bush plan
and reports of a Senate shake-up.
These stocks began to descend May 23, when Sen. Jeffords announced he was
leaving the GOP, and have continued downward, with Calpine and Dynegy losing
13 percent, Mirant off 17 percent and Sempra Energy down more than 4 percent.
Still, analysts say investors might be overreacting.
"Despite the fanfare following the unveiling of President Bush's energy plan,
we believed its chances of passage -- even with a Republican majority -- was
slim at best," said Daniel Ford, head of a team of energy analysts at Lehman
Brothers. "With Jeffords' move, the effort may be even more remote, but the
most likely outcome, inaction, has not changed."
Ford acknowledged that talk of capping wholesale electricity prices for
California has resurfaced in the Senate, though he dismissed the likelihood
of this happening -- even with a Democratic majority -- because "Bush still
has veto power and, to date, has been steadfastly against caps."
Democrats no doubt will emphasize conservation more than Republicans would
have, but the momentum shift in the Senate will not be overly dramatic,
according to Bill Breier, vice president of the Edison Electric Institute, a
Washington-based group that represents utilities.
But other experts note how quickly political positions could shift if Western
power markets suffer the kind of meltdown San Diego experienced last summer.
During that crisis, power bills quickly tripled, costs were passed directly
to electricity consumers and even the most conservative local Republican
leaders called for an end to the open market and a cap on wholesale
electricity prices.
There still will be fierce battles over efforts to relax power plant
emissions -- a Bush proposal that would benefit coal burners -- and proposals
to expand the nation's electricity and natural gas infrastructure.
"There's going to have to be consensus and we've known that from the get-go,"
Breier said.
Analysts emphasized that it would be wrong to assume that much of the Bush
energy plan is now dead-on-arrival with Democrats in control of the Senate.
For instance, attention has been given to the fact that Sen. Jeff Bingaman, a
Democrat from New Mexico, will take over as chairman of the Senate Energy and
Natural Resources Committee, replacing Sen. Frank Murkowski of Alaska.
Bingaman, however, supports legislation critical to the nuclear power
industry, including the Price Anderson Act, a 1957 law set to expire in 2002
that limits corporate liability from a nuclear accident.
Other energy strategies favored by Bush, such as the deregulation of
electricity markets and the construction of 1,300 power plants over the next
20 years, will not be affected by the Senate overhaul simply because their
implementation is heavily dependent on state government, not federal, said
Ray Niles, who analyzes the power and natural gas industries for Salomon
Smith Barney.
"I don't think it makes a huge amount of difference," Niles said. "Things
like increasing drilling were going to be a hard haul for the country
anyway."
Staff writer Craig D. Rose contributed to this report.

After months of pressure, mayor agrees on power plant

By Brian Bergstein
ASSOCIATED PRESS
May 31, 2001
SAN JOSE ) After months of pressure, Mayor Ron Gonzales has dropped his
opposition to a proposed large power plant in southern San Jose.
In a crowded news conference in his office Wednesday, Gonzales announced his
staff had negotiated important concessions from the companies that want to
build the $400 million Metcalf Energy Center ) Calpine Corp. and Bechtel
Enterprises Inc.
The companies agreed to donate $6.5 million to community programs, offer
long-term power contracts at below-market rates to San Jose businesses and
take extra steps to keep the plant's pollution levels down.
"We came to the conclusion this power plant was on its way to San Jose, and
we needed to do everything we could to use our leverage to make this the best
facility we could," Gonzales said. "We worked hard to make this plant better
for the people of San Jose."
Gonzales and the entire City Council in November voted against the
600-megawatt Metcalf plant on the grounds it would be too close to
residential areas.
But as California's energy crisis deepened, Gonzales' position became
increasingly unpopular. Gov. Gray Davis, state representatives, county
supervisors and the Sierra Club called for the plant to be built.
The decision on whether the plant will be built now rests with the California
Energy Commission, which did not return a call for comment Wednesday. The
agency, which is expected to vote this summer, could have approved the plant
even without Gonzales' support.
But Gonzales said the city still "could have made it difficult" by refusing
to extend San Jose's recycled water line to the plant. Calpine and Bechtel
agreed to pay for part of the extension.
Peter Cartwright, president and chief executive of San Jose-based Calpine,
also said Gonzales' support was important.
"We didn't want a situation where the Energy Commission overruled the city,"
Cartwright said. "We have to live here."
Construction on the natural gas-fueled plant could begin this summer, meaning
it could start generating enough electricity for 450,000 homes in 2003.
The Metcalf plant would be built in the Coyote Valley, one of the city's last
remaining chunks of open space. The plant has been opposed by Internet
equipment maker Cisco Systems Inc., which plans to build a $1.3 billion
office complex nearby. A Cisco spokesman did not return a call for comment
Wednesday.
Members of the Santa Teresa Citizen Action Group, based in a neighborhood
near the proposed plant, said the mayor failed to win any significant
environmental concessions on the Metcalf plant. The group's president,
Elizabeth Cord, said she will go to court to block the plant if necessary.

Panel OKs weakened utility district bill

By Ed Mendel
UNION-TRIBUNE STAFF WRITER
May 30, 2001
SACRAMENTO -- A watered-down bill originally intended to create a San Diego
County municipal utility district was approved by an Assembly committee
yesterday after San Diego Gas & Electric dropped its opposition.
The committee rejected a bill last week authorizing the creation of a new
municipal utility district. The new version of the bill simply expresses the
"intent" that the county, cities and special districts cooperate to obtain a
stable source of low-priced power.
The author, Assemblyman Mark Wyland, R-Escondido, pledged to bring the bill
back to the committee for final approval after attempting to negotiate
agreements in the Senate on the operation, governing and public approval of a
proposed new agency.

"What we are really asking for today is to let this proceed out of this
committee, because we do need to address many, many, many of the issues that
were raised and then have the bill come back to this committee for its final
working," Wyland told the committee.
Wyland said he hopes to negotiate a bill that would allow the new agency to
obtain cheap long-term power contracts, possibly by forming groups of
customers that could purchase power directly from generators or marketers.
He said the agency might also generate some power through San Diego County
Water Authority hydroelectric facilities or by purchasing the South Bay plant
in Chula Vista, which is owned by the San Diego Unified Port District and
operated by Duke Energy under a lease.
One thing the new agency would not be doing is using the public power of
"eminent domain" to force SDG&E to sell any of its property. An SDG&E
lobbyist said the utility dropped its opposition after it was made clear that
the proposed new agency would not have the power of eminent domain.
Wyland said he thought the original version of the bill was rejected by the
committee partly because SDG&E "felt burdened" and partly because committee
members thought it might influence attempts to create municipal utility
districts in other areas of the state.
Advocates of municipal utility districts say they have historically provided
cheaper power than investor-owned utilities. The Los Angeles Department of
Water and Power has continued to provide low-cost power to its customers
during the current electricity crisis.
A proposal to create a new municipal utility district may appear on the
ballot in San Francisco this fall. Backers of the San Diego proposal
initially wanted to create a new district without a vote of the people,
hoping to quickly get cheaper power.
Now legislators have made it clear that a vote of the people will be
required. But there is a dispute over whether approval should require a
majority vote or a two-thirds vote, as urged by some Republicans who think
the proposed new agency might be able to raise taxes.
Wyland said that even if the legislation is approved this year, getting a
detailed proposal ready for the ballot next March may be difficult. Some
groups in Escondido and San Marcos have been talking about creating municipal
utility districts in those cities.
Jim Madaffer, a San Diego city councilman, told the committee that he
believed the bill could allow streamlining and efficiencies and other steps
that SDG&E might find beneficial.
"It's on that premise that I am here today," Madaffer said, "and I believe
also that SDG&E is now allowing it to move forward."
Madaffer was corrected by the committee chairman, Rod Wright, D-Los Angeles,
who said the committee decides whether bills pass. Madaffer quickly agreed,
saying he meant to say that SDG&E had dropped its opposition.
Wright, who opposed the original version of the bill last week, joined in the
13-to-0 vote for the new measure.
"You have a lot of work yet to do," Wright told Wyland.
The committee also approved a bill by Assemblyman Jay La Suer, R-La Mesa,
that would require the SDG&E "balancing account" debt to be paid off by
ratepayers over a five-year period.
Legislation capped SDG&E rates last September at a level far below the
wholesale cost of power, producing a debt of more than $600 million by last
month, a sum known as the balancing account.
An aide said La Suer wants to protect ratepayers from a large "balloon
payment" due in a short period. The Utility Consumers' Action Network of San
Diego opposed the bill, arguing that the debt might be lowered by
negotiations or regulatory action.
The aide said the bill does not specify the amount of the debt and that La
Suer is willing to discuss the issue with the consumer group.

Davis fails to sway Bush on price caps

Meeting cordial, but president remains opposed to controls
By John Marelius
UNION-TRIBUNE STAFF WRITER
May 30, 2001
LOS ANGELES -- After a weeklong buildup worthy of international summitry,
President Bush and Gov. Gray Davis met yesterday to discuss California's
electricity crisis, leaving unresolved their fundamental disagreement over
the merits of imposing federal price controls to curb soaring utility rates.
While the meeting between two political rivals was steeped in cordiality, it
ended with Davis proclaiming he intended to sue the federal government if it
didn't deliver price relief to California electricity consumers.
"I am going to pursue every recourse available to me," Davis told reporters
after the 35-minute meeting. "We will file a lawsuit against the Federal
Energy Regulatory Commission for failing to discharge its legal obligation."
While Bush refused to budge on wholesale electricity price caps, Davis said
he was pleased by one Bush action. The president designated Pat Wood III,
Bush's first appointee to the FERC, to act as a personal emissary between the
governor and the regulatory commission's investigation into allegations of
market manipulation by Texas natural gas distributors who charge California
three times what they charge New York.
More than four months into his presidency, Bush yesterday made his first
public appearances in California as president of the United States.
The president met with Marines and their families at Camp Pendleton in the
early morning, then traveled to Los Angeles, where he delivered a speech on
energy and economic policy to the Los Angeles World Affairs Council.
Summing up his approach to unpredictable electricity prices and supplies, the
president said:
"My administration will continue to work to help California through the
difficult months ahead. All our efforts are guided by a simple test: Will any
action increase supply at fair and reasonable prices? Will it decrease demand
in equitable ways? Anything that meets that test will alleviate the
shortages, and we will move swiftly to adopt it. Anything that fails that
test will make the shortage worse."
The president outlined his opposition to electricity price controls -- a
stance Democrats have exploited to portray the Bush administration as a
lackey for profiteering energy companies.
"We will not take any action that makes California's problems worse. And
that's why I oppose price caps," he said. "At first blush, for those
struggling to pay high energy bills, price caps may sound appealing. But
their result will ultimately be more serious shortages and therefore even
higher prices."
An long-distance war of words between Democrat Davis and Republican
administration officials, particularly Vice President Dick Cheney, has
escalated in recent weeks over energy policy.
With Davis two seats away on the World Affairs Council dais, Bush pointedly
called for an end to the acrimony.
"For too long, too often, too many have wasted energy pointing fingers and
laying blame," the president said. "Energy is a problem that requires action
-- not politics, not excuses, but action. Blame shifting is not action; it is
a distraction."
Leading up to yesterday's meeting was a week of posturing by spokesmen for
the two leaders on seemingly every detail, including who invited whom to the
meeting in the first place.
But when the two met -- Bush and Davis are casual acquaintances from their
briefly overlapping tenures as governors -- the session was, by all accounts,
as devoid of rancor as it apparently was of productivity.
"The meeting was cordial, informational, businesslike," Davis said.
As Davis told it, he even deployed the only remaining weapon in his
gubernatorial arsenal -- the threat of a lawsuit -- delicately.
"I said, 'Mr. President, you understand I have to do everything in my power
to seek relief for the people of this state. You would do the same thing if
you were in my position,' and he agreed," Davis said.
Karl Rove, Bush's hard-nosed chief political adviser, also characterized the
meeting in amiable terms.
"They did agree on one thing: that California is entitled to price relief,"
Rove told reporters. Of course, he went on, the president's prescription for
price relief lies in conservation and development of new energy sources, not
price controls.
"When the cap was lowered by the administration in California, 3,000
megawatts of power disappeared from California (to be sold elsewhere)," Rove
said.
For his part, Davis contended the Bush administration's free-market economic
arguments against price caps are beside the point. He maintained federal law
compels the FERC to guarantee reasonable wholesale electricity prices and
stabilize wildly fluctuating markets.
Lawsuits by states against the federal government have little history of
success. Indeed, a lawsuit against the FERC by Assembly Speaker Bob
Hertzberg, D-Van Nuys, was thrown out by the 9th U.S. Circuit Court of
Appeals yesterday just as Davis was threatening another one.
Davis said the court rejected Hertzberg's suit because it failed to allow
administrative remedies to be exhausted. The governor said he filed a number
of motions with FERC seeking rate relief last Friday and would wait 30 days
or so for those to run their administrative course before proceeding with
legal action.
Davis said the total electricity bill in California went from $7 billion in
1999 to a projected $50 billion this year. He said he reminded the president
of the potential political disaster facing both of them if the electricity
situation is not brought under control.
"I did tell him that if we have to pay $50 billion for power, it could well
trigger a recession in California, which could drag down the American economy
into a recession as well," he said.
Bush was greeted at both stops yesterday by protesters denouncing his energy
and environmental policies. Three women -- one of them former Green Party
U.S. Senate candidate Medea Benjamin -- tried to disrupt Bush's World Affairs
Council speech and were removed from the ballroom.
Earlier in the day, Davis held a session where several San Diegans told how
they were affected by soaring electricity costs: YMCA director Michael
Brunker, Gabriel and Christine Rodriguez of Chiquita's Mexican Restaurant,
and Cybele Thompson, president of the San Diego Building Owners and Managers
Association.
"It may not be as obvious as an earthquake," said Brunker of the Jackie
Robinson Family YMCA. "But it's hit us in such a way that it's really
crippling a lot of people."
Staff writer Ed Mendel contributed to this report.

Head of FERC confident California suit will fail

By Toby Eckert
COPLEY NEWS SERVICE
May 30, 2001
WASHINGTON ) The head of the Federal Energy Regulatory Commission said
Wednesday he is confident the agency would prevail in a legal battle with
California Gov. Gray Davis over electricity price controls.
"I feel good about our chances," FERC Chairman Curtis Hebert said, citing a
federal court's decision Tuesday to dismiss a similar suit filed by
California legislative leaders.
Davis has threatened to sue the FERC for allegedly failing to meet its legal
obligation to ensure that wholesale power costs are "just and reasonable."
Such a move would be the latest escalation in Davis' running battle with FERC
over its response to California's power crisis.
"I think the 9th Circuit (federal appeals court) made very clear that the
commission is doing its job appropriately," Hebert told reporters.
A three-judge panel of the San Francisco-based court rejected a lawsuit by
California Senate President Pro Tempore John Burton and Assembly Speaker
Robert Hertzberg that sought to force FERC to impose wholesale price
controls. The court said the lawmakers "have not demonstrated that this case
warrants the intervention of this court."
Davis says that his administration has laid a firmer legal foundation for a
suit by first pursuing administrative remedies at FERC. Several state
agencies made a flurry of filings with the commission last week, asking it to
crack down on wholesale prices that have increased ten-fold over the past
year.
"The (legislative leaders') lawsuit was thrown out ... because there wasn't a
preliminary filing with FERC asking for the relief that the plaintiffs went
into court to seek," Davis said Tuesday. "We have made such filings as
recently as Friday. ... So we have to give them some time to review that
information."
But legal experts said the state may have a tough time building a successful
case against FERC.
Federal statutes generally "give a great deal of discretion to agencies in
carrying out their duties," said Peter Shuck, an expert in regulatory policy
at Yale Law School. "So it would very hard for the state to prevail."
Hebert and fellow Commissioner Linda Breathitt have rejected the firm price
controls sought by Davis, overruling Commissioner William Massey, who favors
them.
Hebert insists the commission has taken steps to lower wholesale power prices
in California and punish price gouging. He cites $125 million in refunds
recently ordered by the agency and a "price mitigation" plan that went into
effect Tuesday.
The plan will use a complicated formula to set a price ceiling for power
sales during severe shortage periods. Generators breaching the limit will
have to justify their prices to FERC or pay refunds.
Davis and other critics say the plan is riddled with loopholes and will bring
little relief to the state. They also say the refunds ordered by FERC to date
fall far short of the billions of dollars in overcharges the state has
endured.
Meanwhile, a spokesman for the California Independent System Operator, which
controls most of California's power grid, said the agency intends to meet a
Friday deadline for filing comments with FERC on joining a regional grid
management organization. FERC has threatened to revoke the limited price
curbs if the ISO fails to present a plan for joining the organization.
California's three investor-owned utilities ) Southern California Edison, San
Diego Gas & Electric and Pacific Gas & Electric ) plan to make similar
filings.

Grid managers call Stage 2 alert, but hope to avoid blackouts

ASSOCIATED PRESS
May 30, 2001
SACRAMENTO ) Managers of the state's power grid called a Stage 2 alert
Wednesday and asked customers to conserve power as temperatures climbed.
The Independent System Operator said it did not expect blackouts, although
spokeswoman Stephanie McCorkle said electricity supplies were "obviously very
tight."
Higher temperatures statewide were driving up electricity use about 1,200
megawatts over Tuesday, she said.
Power plants off-line for repairs and increased power usage caused the
state's electricity reserves to dip below 5 percent, prompting officials to
declare a Stage 2. A Stage 3 alert is called when reserves are in danger of
falling below 1.5 percent and can be followed by rolling blackouts.

FERC Chief Unfazed By Threat of Third Lawsuit

By RICARDO ALONSO-ZALDIVAR and JUDY PASTERNAK, Times Staff Writers

?????WASHINGTON--The beleaguered chairman of the Federal Energy Regulatory
Commission said Wednesday that he was not fazed by California Gov. Gray
Davis' threat to sue the agency for failing to cap wholesale electricity
rates.
?????California officials have gone to the federal courts twice before to
force FERC to impose price caps, Curt Hebert told reporters. And the U.S. 9th
Circuit Court of Appeals in San Francisco has twice rejected the suits.
?????Davis, observing that FERC has a legal obligation to ensure that
wholesale electricity rates are "just and reasonable," threatened to go to
court again after he failed in a meeting Tuesday to persuade President Bush
to support caps on wholesale electricity prices.
?????"They've sued us two times and they have been [dismissed] two times,"
Hebert said. "I feel very good about it."
?????Responding to reporters' questions, Hebert also appeared to be unaware
of media reports that President Bush had asked a rival for his chairmanship,
Patrick Wood III, to play a special role in dealing with California's
problems.
?????Wood, a Bush confidant who until now had been chairman of the Texas
Public Utility Commission, was confirmed by the Senate as a FERC commissioner
last week and is widely expected to be named to Hebert's job. The president
can designate any FERC commissioner as chairman without further action by the
Senate.
?????White House officials said during Bush's visit to Los Angeles on Tuesday
that Wood would follow up on concerns raised in the president's meeting with
Davis.
?????Wood said in an interview that he talked briefly with Davis three weeks
ago and more recently with California PUC President Loretta Lynch. He said
his charge is vague: to review the entire situation.
?????"I'm looking at short-term things and long-term things," he said, noting
that he had heard from lawmakers "on both sides of the aisle" complaining
that FERC had not gone far enough.
?????Wood, who advocates a more activist role for FERC, said he wants to
monitor how the agency's efforts to limit price spikes in California are
working and that he might push for changes. Unlike Hebert, he said the
agency's standard for deciding whether a company has market power--enough
influence to sway prices--needs to be reconsidered. He said he is also open
to increasing the amount of rebates ordered to utilities for January.
?????And he said he thought FERC should also take another look at the design
of California's deregulated market. "Your work never stops," Wood said. "You
never get there and say, 'We're done.' "
?????California, he added, "is salvageable," though he said blackouts are
inevitable this summer.
?????FERC itself has acknowledged that California is paying unfair prices for
electricity, particularly during power shortages. But instead of imposing
price caps, the agency has instituted a complex system to monitor the market
and seek refunds from power sellers that overcharge during emergencies.
?????A majority of FERC's governing board believes that price caps would
deter investors from building new power plants in California, thereby
complicating efforts to increase energy supplies. Price caps "would destroy
what is left of California," Hebert said Wednesday.
?????State officials disagree.
?????With California paying as much as $1,900 per megawatt hour to avert
blackouts earlier this month--five times the current market price--state
officials argue that FERC's approach is no deterrent and that the agency has
a legal obligation to impose price caps.
?????Davis and others contend that temporary controls would bring order to
the power markets and prevent further damage to California's economy. They
point out that the energy industry operated efficiently under government-set
rates until the recent onset of deregulation.
?????But the courts have held that FERC has wide latitude in fulfilling its
obligations under federal law.
?????In an April 11 decision denying a petition for relief by the city of San
Diego, a 9th Circuit panel ruled that the same law that gives FERC authority
to impose price caps also allows it to pursue alternatives.
?????On Tuesday, the same court dismissed a petition from state Senate leader
John Burton, citing its earlier decision in the San Diego case.

Copyright 2001 Los Angeles Times

The Home Energy Drain
How Appliances Draw Electricity, Even When Off

By DAVE WILSON, Times Staff Writer

?????When devices such as stereos are turned off, we think of them as dead.
But it turns out they're only mostly dead. And mostly dead is a little bit
alive.

Graphic: Standby power consumption of common appliances.

?????For instance, have you ever wondered how a television set can understand
the "power on" command from the remote control if the TV isn't using any
power at all? The fact is nearly all television sets--in fact, most home
appliances--use power as long as they're plugged in to a live electrical
outlet, if only to receive and interpret remote control signals or keep the
little clock running.
?????All those little trickles of electricity can add up to a steady stream
of juice that users end up paying for--power that's being drained from a
system that can't meet the state's needs as California enters a summer of
rolling blackouts and rising power bills. Plus, the delicate electronic
circuitry that makes our favorite gizmos work can be damaged when the power
flow abruptly stops and starts.
?????Researchers refer to this sort-of-off-but-sort-of-on condition as
"standby power" and say the drain on the electrical supply is
significant--and continuing to rise.
?????"When you add up all these things like TVs and VCRs, it looks like
standby use in California is almost 10% of the residential use of
electricity," said Alan Meier, staff scientist at the Berkeley Laboratory and
an internationally recognized expert on the phenomenon of standby power drain.

Shopping for a Surge Supressor
Fluctuating power levels can cause damage under certain conditions to devices
that draw power all the time. One tactic to prevent damage is using a surge
supressor.
 When shopping for a surge suppressor, the key number is the maximum level
of electricity that will be let through in case of a surge. This number is
referred to as, depending on the marketing guys behind the product, "clamping
voltage," "let-through voltage" or "voltage rating." The lower the number,
the better.
 Right now, the best rating you can get is a surge suppressor carrying the
UL inspection seal certifying that it's met the 1449 standard and a clamping
voltage rating of 330 volts.
Also, look for suppressors with a 1-nanosecond response time or less;
cheaper suppressors take longer to respond to a spike, which can be too late
to protect your components.

-- DAVE WILSON

?????The cost of this drain probably isn't especially onerous to most
consumers. Leaving your answering machine plugged in all the time, for
instance, will cost you about 37 cents a month, assuming you're paying about
17 cents a kilowatt-hour.
?????The total cost of standby power probably is in the neighborhood of $100
a year per household at current rates, though that figure will rise as
electricity becomes more expensive. Though that's not a vast sum to many
people, reducing electricity usage is critical to maintaining a steady power
supply in California.
?????The difference between a Stage 2 power emergency and Stage 3--the point
at which rolling blackouts kick in--is only 3.5% of total reserve electrical
capacity. So cutting back on that leaking 10% in homes can make the
difference.
?????Not all the standby power is wasted. An answering machine is pretty
useless if it doesn't have access to power all the time since part of the
device's job is to be primed to pick up the phone if it should ring. It's
those other devices, such as the microwave oven clock that pulls power even
though nothing's being cooked, that are the problem. All devices that use
standby power could be designed to use as little electricity as possible.
?????Standby power drain is getting worse as more of the items we have in our
homes move from mechanical switches and timers to electronic controls. The
typical household today uses 7,000 kilowatt-hours of power each year.
?????Overall, residential consumption of power has risen 17.6%, from 68,000
gigawatt-hours in 1990 to an estimated 80,000 gigawatt-hours, according to
the California Energy Commission. Even when adjusted for population growth,
Californians use more power than they did 10 years ago--despite the fact that
household appliances got more energy efficient.
?????One reason: We've got a lot more energy-gobbling devices in our homes.
For instance, Fred Johnson, who works in Silicon Valley's high-tech industry,
has three TVs, each with a DVD player. He's also got two TiVo digital
recorder boxes, four computers and two stereo systems.
?????"Fortunately, it's not all on simultaneously," he said.
?????Another reason for the increase in power draw is a simultaneous increase
in the number of devices that are always on. For instance, older microwave
ovens used a mechanical timer, which means the device didn't draw power
unless the oven was actually heating something up. Newer ovens use electronic
touch pads and digital clocks, both of which require a steady stream of
power. Part of the reason for the shift was interest in reliability;
mechanical switches wear out or need maintenance, whereas electronic controls
are generally service free.
?????Those digital controls are showing up in things such as stoves,
dishwashers, washers and dryers, which means these devices also leak
electricity even when they're not actually working.
?????Some devices are so badly designed that they generally use as much
electricity when they're theoretically off as when they're on, Meier said.
"The set-top boxes for cable and satellite television broadcasts are good
examples," he said. Manufacturers aren't under any pressure to improve the
design of electronic components in the home because there's no financial
incentive for them to do so.
?????Consumers wind up paying the price.
?????"We think there are typically 20 devices in a home that are consuming
standby power," Meier said. "In the average home in California, standby power
is somewhere around 500 kilowatt-hours a year. And some users are paying 20
cents a kilowatt. So that's about $100 a year for appliances that aren't
actually doing what you bought them for."
?????That hundred bucks during the course of a year might seem a pretty small
price to pay for the ability to change the music coming out of the CD player
without having to lever yourself off the couch.
?????But even if it does bother you, there's not a lot you can do, short of
unplugging devices when they're not in use. Sometimes unplugging a device
isn't practical, though, because many components will lose information stored
in them if the power goes out. Your radio might forget its presets, your VCR
will lose the time and some TVs will have to be reprogrammed with the local
television stations available. ?????On a fundamental level, this is an issue
that has to be addressed by electronics manufacturers, who, until now,
largely ignored the issue. Meier has been leading a fight during the last
couple of years to get manufacturers to build devices that use standby power
more efficiently, to keep that functionality but make better use of
electricity.
?????"Some of these devices draw 15 or 20 watts," Meier said. New designs can
reduce that flow to 1 watt, but few manufacturers have shown enthusiasm for
the goal. That might change as governments put pressure on manufacturers.
Australia, for one, recently endorsed the goal of 1-watt standby drain for
all appliances.
?????In addition, there is some concern that, under certain conditions,
devices that draw power all the time could be slightly more vulnerable to
damage caused by fluctuations in the power supply than devices that are
completely powered down.
?????If that's true, it makes such things as surge suppressors and
uninterruptible power supplies even more important to consumers at a time
when rolling blackouts are expected to become a regular occurrence.
?????Surge suppressors are designed to choke off a spike of electricity
before it can reach your valuable components and damage them. Typically, a
lightning strike a mile or so away can flow down electric, telephone or cable
television wires and fry any component connected to the line, such as a home
computer. The surge suppressor intercepts that overload.
?????These surges can occur in many different situations, such as apartment
buildings where large motors--for instance, those used in air conditioners
and elevators--routinely go on and off.
?????"Any time the power goes off and goes back on again, that's a tremendous
hit on the electrical system, and that can cause surges," said John
Drengenberg, an electrical engineer who's manager of global consumer affairs
for Underwriters Laboratories, the nonprofit testing organization. "I think
maybe right now in California, in particular, installing transient voltage
surge suppressors would be a good idea."
?????Surge suppressors don't help at all with a brownout, which is an
insufficient flow of electricity through the wires.
?????Brownouts are most often caused by things such as a squirrel shorting
out a line and can be identified by suddenly dimmed lights. Low voltage can
seriously damage appliances that use motors--such as refrigerators and air
conditioners--so if the lights go dim and stay dim, unplug such appliances
until the power company makes repairs.
?????Items that use electricity to create heat or produce light will continue
to function with little chance of damage; they just won't get as hot or be as
bright.
?????Some devices, such as computers, will get trashed by low power or sudden
loss of power, especially if the power fluctuates while the system is writing
data to the hard drive. Computers should be turned off using the standard
shutdown procedure for their particular make and model to avoid corruption of
the operating system, which can create lots of headaches for users.
?????To avoid that, consider an uninterruptible power supply, basically just
a system of rechargeable batteries that's always plugged in to the electrical
outlet. Plug the components into the UPS, and if the voltage on the line
drops or disappears, the juice flows from the batteries to the device.
?????Many of these systems also come with surge suppressors built in as well,
protecting equipment from both too much and too little electricity. A
high-end consumer UPS costs less than $200.
?????Most of these systems are designed to safely power down a computer in
the event of a power outage. They won't provide enough juice for more than a
few minutes on a standard desktop computer.
?????And of course, the debate about whether some conservation efforts have
diminishing returns continues. Turning off your computer reduces electricity
consumption, but repeatedly turning the computer off and on can stress the
electronic circuitry, which could cause it to fail sooner.
?????Devices that are pulling down considerably less electricity might eke
out an hour or two on a UPS. If you find yourself growing increasingly
annoyed at having to reset the clock on the VCR or microwave, a
consumer-level UPS might provide enough stored power to get you through a
blackout that lasts an hour or two.
?????Don't plan on watching TV or making popcorn. We're talking strictly
about keeping the clock on line, although most people probably won't be
interested. "Spending $150 because you don't want to set the clock on the VCR
probably won't be very appealing to many people," said James Little, a
spokesman for Belkins Components, which makes such devices.
?????And there's no such thing as a free lunch. UPS systems are also a drain
on power. It costs money to keep the batteries charged in preparation for the
blackout. So don't look to a UPS as a solution to conservation.
?????What you can do is plug components that can safely be completely shut
down into a surge suppressor and kill the power to that surge suppressor when
you're not using them.
?????For instance, think about running all the power cords for every
component that makes up your stereo system--amplifier, CD player, DVD
player--into a single power strip equipped with a surge suppressor. Most
surge suppressors have a kill switch, a button that will cut off all power to
the devices plugged into it.
?????Hit the switch and make those components more than mostly dead.

* * *
?????Dave Wilson is The Times' personal technology columnist.

Copyright 2001 Los Angeles Times

Heat's on, but so are lights
100-degree temperatures aren't widespread, sparing the grid
Matthew B. Stannard, Carolyn Said, Chronicle Staff Writers
Thursday, May 31, 2001
,2001 San Francisco Chronicle
URL: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2001/05/31/MN206011.DTL

Thermometers reached triple digit records around the Bay Area yesterday,
feeding several fires and challenging, but not quite breaking, the state's
power grid.
The sweltering heat was caused by a huge dome of hot air that blocked the sea
breezes that normally keep the Bay Area comparatively cool this time of year.
National Weather Service forecasters said the high pressure system, centered
over Nevada, should head east today and allow temperatures to return to
somewhere near normal by tomorrow.
The short duration and highly localized nature of the heat wave --
concentrated mainly in Central and Northern California -- kept it from adding
much to the state's energy woes, said Stephanie McCorkle, a spokeswoman for
the Independent System Operator, which oversees the state's power grid.
"Those are the kinds of heat waves that we like: the type that are isolated
to one area."
Yesterday presented California's grid operators with a better scenario than
two weeks ago, when more-pervasive hot weather and numerous plant service
interruptions set off two days of rolling blackouts.
While no rolling blackouts were ordered, the ISO declared a Stage 2 energy
alert at 2 p.m., asking customers to conserve power as temperatures climbed
and the state's energy reserves dipped below 5 percent.
Aiding yesterday's situation was the availability of more power plants in
service than during the May 7 and May 8 blackouts. About 14,400 megawatts of
power generation -- one-third of the state's capacity -- were offline for
repairs and other reasons on May 7 and 8, while yesterday the figure was 10,
700 megawatts out of service.
Meanwhile, downtown San Francisco melted as the thermometer hit 101 degrees,
higher than any day in May since at least 1914. Not quite the city's all-time
high of 103, but close enough to drive some people out of the city
altogether.
FLEEING HOT S.F.
Sonafman Allah, 22, drove to Lake Temescal in Oakland with his friends Nabila
Suleiman, 20, and her sister, Saida, 19.
"It's a quick little getaway from San Francisco," Allah said, relaxing on a
blanket spread under the shade of a tree.
But Oakland was pretty hot, too. Temperatures at the airport hit 94, the
hottest May 30 since 1978. May 30 records were also shattered in San Jose,
where the mercury hit 100; San Rafael, which saw 99; Santa Cruz, where
surfers sweltered in 92 degree heat.
Redwood City, at a record 101, was hot enough to make John Handley loath to
leave his nicely air-conditioned Office Depot delivery truck.
"I stay in there as long as I can," Handley said, hustling a cart of office
supplies across the steaming concrete into San Mateo County's Hall of
Justice.
FIREFIGHTERS HAMPERED
Elsewhere in the state, the heat and low humidity hampered thousands of
firefighters.
An early morning fire near the Sonoma-Napa county line quickly built to a
100-plus acre blaze and was battled by 30 engines, five bulldozers, and 11
hand crews from state and local fire stations. Fire officials are still
investigating the cause.
The fire, near Kellogg, had imperiled some homes in the early part of the
day, but the threat abated by 12:30 p.m., according to Mike Parkes of the
California Department of Forestry. It was fully contained last night.
Nearly 250 miles away, near Susanville, more than 1,900 firefighters were on
the scene of a 4,346 acre fire yesterday, and officials said they hoped the
blaze, fed by heat and strong winds, would be contained by 6 p.m. today.
Investigators believe that the fire was caused by target shooting near
Williams Creek and have cited a man they identified as William Bushey for
allegedly sparking the blaze. The cost of suppressing the fire so far has
been $3.1 million, and $2.5 million in timber has been lost, fire officials
estimate.
SUISUN CITY BLAZE
And late yesterday, the Solano County Sheriff's Department reported a 75-
acre fire burning out of control near Suisun City. It was being battled by
volunteers and its cause is under investigation.
The good news, forecasters said last night, is that the heat spell should
prove short-lived: temperatures in San Francisco should collapse back into
the 80s today, and inland cities should see relief by tomorrow.
Chronicle staff writers Suzanne Herel, Pamela J. Podger and Pia Sarkar
contributed to this report. / E-mail the writers at mstannard@sfchronicle.com
and csaid@sfchronicle.com.
,2001 San Francisco Chronicle ? Page?A - 1

Municipal utilities warned
Governor says he'll seize excess electricity if prices don't come down
David Lazarus, Chronicle Staff Writer
Thursday, May 31, 2001
,2001 San Francisco Chronicle
URL: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2001/05/31/MN154796.DTL
Sacramento -- Gov. Gray Davis threatened last night to seize excess power
generated by California's municipal utility districts, which he said have
charged even higher electricity prices than out-of-state generators.
Davis said in an interview with The Chronicle that some municipal utility
districts have charged the state as much as 10 percent more than the average
wholesale cost demanded by private power companies.
The governor's tough talk came as California suffered through a Stage 2 power
alert and faced the prospect of a long, hot summer of rolling blackouts and
skyrocketing electricity prices. So far this year, the state has paid more
than $8.2 billion to buy power for its cash-strapped utilities.
In a variation on his threat to seize power plants from out-of-state
generators if they continue gouging California ratepayers, the governor said
he would use his executive powers to claim excess juice from the locally
owned utilities if they do not lower their prices.
He said he is ready to go to court if they offer resistance.
"We're going to get that power one way or another," Davis said.
Municipal utilities are city-owned power companies. In Northern California,
there are municipal utilities in Alameda, Palo Alto, Redding, Sacramento and
Santa Clara. Los Angeles has the largest municipal utility in the state.
30 DAYS TILL CONTRACT DETAILS
For the first time, the governor also gave a time frame for releasing details
of more than 40 long-term electricity contracts California is signing with
generators since the financial meltdown of the state's two biggest utilities.
He said that after about six more contracts get nailed down, he expects full
details to be made available within 30 days.
Although the contracts involve nearly $40 billion in public funds, Davis and
other state officials have adamantly refused to divulge their contents,
insisting that secrecy is needed to remain competitive during negotiations.
The Chronicle and other media outlets have filed suit for access to the
contracts, arguing that the public has a right to know how its money is being
spent.
RUDE AWAKENING
While going toe-to-toe with the out-of-state generators, the last thing Davis
needed was for municipal utilities -- the home team, as it were -- to emulate
the Texas big boys and dig deep into California's pockets.
Yet the governor's negotiators have been struggling for weeks to convince
municipals that they are obliged to provide power at cost -- which Davis
insisted they are required to do by law.
He met last week with the heads of a dozen municipal utilities and told them
explicitly that he would not tolerate gouging from within the state as
California faces a summer of potential blackouts.
The governor said after the meeting that the municipals had agreed "to make
most of their excess power available this summer . . . at prices
significantly lower than those being charged on the spot market."
Apparently, however, little progress has been made since that declaration.
Davis told The Chronicle last night that he is still "trying very hard to
promote this notion that we're all in this together."
While unwilling to specify which municipal utilities have been most
aggressive in their pricing, and refusing to place a dollar amount on how
much the utilities charged, Davis said he is prepared to seize up to 800
megawatts of output if the they do not change their ways.
Eight hundred megawatts is enough power to light about 800,000 homes.
Representatives of the various municipal utilities could not be reached for
comment, nor could a spokesperson for the California Municipal Utilities
Association in Sacramento.
"I told them that they will either (reduce their prices) voluntarily or
involuntarily," the governor said.
UNCERTAIN FUTURE
It remains to be seen, however, whether the municipal utilities will play
ball. To date, they have shown a firm inclination to go their own way.
In March, Lodi's municipal utility district and a Northern California
municipal utility cooperative that includes Palo Alto, Santa Clara and
Alameda told Pacific Gas and Electric Co. that they will not participate in
rolling blackouts during power shortages.
"I won't arbitrarily screw my customers . . . so 5,000 PG&E customers can
turn on their lights somewhere else," said Alan Vallow, director of the
utility serving Lodi's 58,000 residents.
E-mail David Lazarus at dlazarus@sfchronicle.com.
,2001 San Francisco Chronicle ? Page?A - 1

Regulators want state trade-off for caps
Davis asked to give up control of power lines
Bernadette Tansey, Chronicle Staff Writer
Thursday, May 31, 2001
,2001 San Francisco Chronicle
URL: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2001/05/31/MN221412.DTL
California's testy relationship with federal energy regulators could turn
into a showdown tomorrow, when state power officials must decide whether to
surrender some control over the state's electricity market or risk losing
limited price curbs that kicked in this week.
In agreeing last month to set flexible caps to restrict price gouging during
electricity shortages, the Federal Energy Regulatory Commission said the
state and its utilities must agree to let an independent organization manage
California's power transmission lines.
Under that setup, California would be one of a group of Western states
sharing a linked transmission grid whose rates and access rules would be set
by independent managers.
It is part of the commission's drive to create regional electricity markets
throughout the country and make it easier to trade power across state lines.
The regional grids would be a prelude to the nationwide free market in
electricity advocated by the Bush administration and power marketers like
Enron.
But California Assembly Democrats who have challenged the federal demand say
the requirement could interfere with some of the state's homegrown solutions
to its energy crisis, such as Gov. Gray Davis' proposal that the state buy
and run transmission lines owned by Southern California Edison Co.
"A lot of folks were wondering how those two things would interact and are
they mutually exclusive," said Paul Hefner, an aide to Assembly Speaker
Robert Hertzberg, D-Sherman Oaks.
Other officials say the federal requirement is premature because no regional
organization yet exists that California can join.
Mike Florio, a board member of the California Independent System Operator,
which manages the state's power grid, said California is already part of
regional efforts to clear transmission bottlenecks and share surplus power.
But Florio said no Western state will rush into a regional arrangement and
surrender part of its authority without ensuring a good deal for its own
consumers.
"We certainly don't want to be forced into an entity where generators or
power marketers get to dictate the terms," Florio said. "This has got to be a
long courtship rather than a shotgun wedding."
When federal regulators initiated the move toward regional transmission grids
during the Clinton administration in 1999, participation was voluntary, said
Gary Cohen, general counsel to the state Public Utilities Commission.
But in its April 26 order, the federal energy commission made its offer of
limited price relief contingent on a filing by June 1 from the Independent
System Operator committing the state to a regional management plan.
The PUC and the Assembly are challenging that requirement. If anything, Cohen
said, the state needs to increase control over its energy system while it
recovers from its disastrous debut into deregulation, rather than submit to a
regional authority that would be overseen by the federal government.
"This doesn't seem to be the time to be doing more experimenting," Cohen
said. "We certainly have not been able to rely on FERC to look out for the
interests of Californians."
WAITING FOR STATE'S RESPONSE
Curt Hebert, chairman of the federal commission, declined to say yesterday
whether the government would immediately yank the soft price caps that went
into effect this week if it found the ISO response unsatisfactory.
"He said he didn't want to prejudge the case," said commission spokeswoman
Tamara Young-Allen. "He will wait to see what California files."
PUC Commissioner Jeff Brown said he would be willing to give up some state
control of the grid in exchange for meaningful price controls. But, he said,
the federal measures granted fell far short of what California needed.
"Hell, those caps are pretty toothless as they are," Brown said.
The price controls are in effect only during power shortages. The cap is the
price offered by the least-efficient generating plant. And generators can
challenge any federal ruling that they have exceeded the caps, by claiming
high costs.
The controls were in place for the first time yesterday, when the state
declared a Stage 2 power emergency, meaning reserves fell below 5 percent of
available capacity.
Florio said state power managers' answer to the federal government will
probably be that they are already doing within California much of what a
regional transmission organization would do.
ISO COULD PLAY A ROLE
The ISO manages the grid to ensure that power gets to where it is needed in
the state, the organization told federal regulators in January. The agency
could represent California when a Western regional organization develops, it
said.
The governor declined to say yesterday what stand he would take on federal
regulators' demand.
"I'm of a mind to do something, but I still have to talk to my lawyers,"
Davis said.
Assembly Democrats say regulators in Washington have no right to withhold
actions to correct California's dysfunctional power market.
"They're required to . . . ensure that just and reasonable rates prevail in
the market," Hefner said. "Why should we have to dicker to get them to do the
job Congress created them to do?"
E-mail Bernadette Tansey at btansey@sfchronicle.com.
,2001 San Francisco Chronicle ? Page?A - 1

NEWS

Plan would have biggest customers pay Edison's debt
Greg Lucas
Sacramento Bureau Chief
?
05/31/2001
The San Francisco Chronicle

FINAL
A.5
(Copyright 2001)
?

?
Legislative leaders are drafting a new rescue plan for Southern California
Edison that would put the utility back on its feet financially at the expense
of its biggest customers.
The plan would leave manufacturers, refineries and other big industrial
customers with the burden of paying nearly all the utility's $3.5 billion
back debt through a dedicated charge. Residential and small commercial users
would be on the hook for only a fraction of the back debt.
?

Big users say it is unfair to saddle them with all of Edison's debt, but
supporters of the plan say it's these users that wanted deregulation and
should shoulder the costs it created.
"We're trying to put something together in a way that solves all these
problems, and if people are to be pigheaded about it, we won't solve any
problems," said Assemblyman Fred Keeley, D-Boulder Creek (Santa Cruz County).
Although the plan is an alternative to Gov. Gray Davis' proposed deal to put
Edison back on its feet financially, it could be used as a model to help
restore Pacific Gas and Electric Co. to solvency.
Democrats say the plan contains some elements desired by Republicans, but GOP
lawmakers object to saddling large business users with Edison's debt.
The plan is based on the way gas customers are divided into "core" and
"noncore" users.
SEPARATING 'CORE' USERS
Under this proposal, electrical users would be divided the same way. Core
users would be customers who use 500 kilowatts or less a month. Noncore would
be those using more than 500 kilowatts.
Out of Edison's 4.2 million customers, only 3,600 would be noncore customers.
But those 3,600 customers use about 26 percent of Edison's demand for energy.
Core customers would get their power from generators owned by Edison,
long-term contracts and alternative energy producers, such as wind farms and
solar panels, on contract with the utility.
That would mean those customers would no longer be subject to the whims of
the spot market, which has far higher prices than other sources of
electricity.
Large users, the noncore customers, would be given the right to negotiate to
buy their power directly from generators or build on- site power plants to
make themselves energy self-sufficient.
The plan would be phased in through January 2003 to give large energy
customers time to prepare for buying power on the open market.
During that period, residential, small business and large industrial users
would all share in paying off Edison's debt. But in 2003, that burden would
shift exclusively to the big users.
Republican lawmakers and those same large users have been clamoring to be
given what is called "direct access" to generators so they can negotiate
cheaper rates.
Enron is also backing the idea of cutting loose the largest electricity users
because that would create a built-in market for the energy the company sells.
Large users who want to remain on the grid could do so.
EDISON 'ENCOURAGED'
Sources said Edison officials met with lawmakers over the weekend to iron out
details of the plan.
A spokesman for Edison said he was "encouraged" by the talks.
"I haven't seen a finished product or a plan," said Bob Foster, a senior vice
president with Edison. "They're approaching this in a spirit of goodwill and
trying to find a solution."
Big businesses complain that the plan does not work because right now, there
is nowhere they can buy cheap electricity.
"We're very concerned that separating the core from the noncore means we will
experience extreme rate hikes over the next two years," said D.J. Smith, a
lobbyist for the California Large Energy Consumers Association.
"When you add blackouts, the multiple interruptions of production and another
potentially huge rate hike, the result would be catastrophic to the economy,"
Smith said.
Added Dorothy Rothrock, a lobbyist for the California Manufacturers and
Technology Association: "What's the rationale for the noncore to be paying
the entire Edison undercollection? It sounds to me like just pure politics.
They don't want voters to pay because they vote."
CONSUMER ADVOCATE SMELLS A RAT
Harvey Rosenfield, head of the Foundation for Taxpayer and Consumer Rights,
said he thought the plan would eventually turn into a bailout as business
interests muscle lawmakers into pushing some portion of Edison's debt onto
residential and smaller commercial customers.
"I think it's a trick. We've seen this same tactic used at the Public
Utilities Commission, where what were supposed to be rate increases for big
business end up costing more for residential and small businesses,"
Rosenfield said.
The new plan also does not include the outright purchase of Edison's part of
the transmission system that loops electricity around the state.
Davis backs buying the lines for $2.7 billion. Democrats have insisted that
for the state's financial help, taxpayers receive something of value.
Republicans have insisted that they will back no proposal that includes state
purchase of transmission lines.
In the new proposal, the state would have a five-year option to buy the
transmission lines for $1.2 billion -- the book value of the asset.
In addition, the utility would make $1.5 billion available to the state to
either purchase other assets -- such as Edison's hydroelectric facilities,
for example -- or use it in partnership to build new power plants.

PHOTO; Caption: "If people are to be pigheaded about it, we won't solve any
problems," said Assemblyman Fred Keeley.

San Jose mayor changes course, endorses power plant
Posted at 10:29 p.m. PDT Wednesday, May 30, 2001
MIKE
ZAPLER
Mercury News

After a year of staunch opposition to a major power plant in South San Jose,
Mayor Ron Gonzales reversed course Wednesday and endorsed the project,
removing the largest remaining barrier to construction and angering residents
of a nearby neighborhood he had pledged to protect.
Speaking before news cameras and reporters in his City Hall office, Gonzales
said he had negotiated an agreement with Calpine that eased his concerns
about the Metcalf Energy Center project. The deal, he said, contains
provisions to help shield the Santa Teresa neighborhood from air pollution,
gives local businesses the chance to negotiate below-market electricity rates
and provides a sure energy source for local residents.
``We need power in San Jose and we believe this power plant is needed in San
Jose,'' Gonzales said. ``We've worked hard to make this plant better for the
neighborhoods and better for the city.''
But the city entered talks with Calpine about five weeks ago in a vastly
weakened position, and its chief negotiator, mayoral budget director Joe
Guerra, was unable to extract most of the concessions the city and
neighborhood had sought. Santa Teresa leader Elizabeth Cord called the
neighborhood protection provisions ``totally not substantive,'' and another
opponent said a lawsuit is likely if the plant is ultimately approved.
``The mayor's deal does nothing to reduce the impact on this neighborhood,''
Santa Teresa activist Issa Ajlouny said. ``It's the same project as it was
two years ago except San Jose residents will be paying millions of dollars
more.''
Shift by Cisco?
Cisco Systems, which is planning a 20,000-worker campus adjacent to the
proposed plant and has strenuously opposed it, appears to be softening its
opposition. Kent Jenkins Jr., a spokesman for the company, said Wednesday
that Cisco would still prefer not to have the plant, but that officials were
pleased, at first glance, with the health and safety concessions Gonzales had
negotiated. Asked whether Cisco might file a lawsuit, Jenkins said, ``We're
not ruling anything in or out and by that, I don't want to imply we are
considering anything.''
He added that the agreement will have no bearing on the company's plans to
build the campus. ``All along we were committed to pursuing Coyote Valley and
that remains unchanged,'' he said.
With experts predicting a summer of rolling blackouts, and with the
California Energy Commission expected soon to override the city council's
November rejection of the plant, Gonzales was under enormous pressure to
strike a deal. Polls taken by Calpine had shown overwhelming public support
for the plant, another ominous sign for the mayor who is up for re-election
next year.
While the city probably could not have blocked approval of the plant once it
got state approval, the mayor indicated as late as April?18 that the city
might fight it in court. But that possibility vanished with Wednesday's
announcement, leaving a possible neighborhood-backed lawsuit as the only
potential threat.
``This power plant is coming to San Jose. That's clear from the support it
has gathered in Sacramento,'' Gonzales conceded, referring to Gov. Gray
Davis' endorsement in April. So rather than continue to fight an uphill
battle, Gonzales decided it was best to negotiate what he could.
At the news conference, Gonzales touted provisions in the deal that will
provide two additional air monitoring stations to ensure the plant complies
with local air quality standards. The agreement also provides a three-month
window, prior to the plant's opening, for San Jose businesses to negotiate
long-term power contracts with the Metcalf plant at a ``below-market'' rate,
said Calpine chief executive officer Peter Cartwright.
City's concessions
But the city clearly got less than it wanted, which was at least partly the
price of Gonzales' longtime resistance to the 600-megawatt plant:
?One key negotiating point was how much Calpine would pay to extend a
recycled-water pipeline seven miles to the plant site. The city started by
asking the company to pay at least $25 million of the roughly $50 million
price tag. But, in a provision Gonzales touted as a victory, Calpine will pay
20 percent of the cost, or $10 million, and the city will pick up the
remaining $40 million. Calpine said the company is simply paying its fair
share.
?In an effort to protect neighborhoods from pollution, the city wanted
Metcalf to operate full time, since emissions are highest when a power plant
first fires up. The city tried to arrange a long-term contract with the state
to buy power from Metcalf to keep it running constantly, but officials balked
at such a commitment.
Calpine said it intends to keep the plant running constantly as long as
demand -- in the form of annual contracts with the state -- justifies it. If
demand is lacking, the company will lower the number of potential times the
generator will start up by 25 percent, from 624 per year to 468 annually.
That restriction would last five years, by which time the energy crisis in
California is expected to be long over.
?In the fall, Calpine offered $10 million in electricity discounts to help
win the city's backing for Metcalf. Wednesday's agreement includes a $6.5
million benefits package, including $5 million for parks and open space
acquisition in Santa Teresa; $1 million for energy conservation programs and
assistance to low-income people to help pay their energy bills; and $500,000
to help provide health insurance to San Jose children.
?Calpine has agreed to install new technologies that reduce or eliminate the
use of ammonia, which would be extremely hazardous if accidentally released,
as soon as those systems are deemed ``economically feasible'' and approved by
state regulators. But because there is no standard in the agreement, the
burden would fall on the city to prove that a new technology was feasible. If
the two sides disagreed, the decision would fall to a third-party arbitrator.
There is also a significant question of whether ammonia-free technology,
known as SCONOx, already is viable -- a position taken by the U.S.
Environmental Protection Agency.
Calpine's Cartwright, who appeared with Gonzales, said Wednesday that the
company is committed to switching as soon as possible from liquid ammonia to
less hazardous solid ammonia.
The city council is scheduled to take up the agreement at its Tuesday
meeting. Although Gonzales persuaded the council to vote with him against the
controversial project last fall, most members are expected to go along with
the mayor's switch. At a closed-door meeting on Tuesday, council members
Forrest Williams, who represents Santa Teresa, and Linda LeZotte aired
significant concerns with the pact's environmental provisions, but there was
no other notable dissent, an attendee said.
The project would then go through the city planning process again this fall.
Calpine hopes to begin construction this year and to have the plant up and
running by summer 2003.

Contact Mike Zapler at mzapler@sjmercury.com or at (408) 275-0140.

State admits power-deal secrecy
Posted at 10:55 p.m. PDT Wednesday, May 30, 2001
BY JOHN WOOLFOLK

Mercury News

As state officials cut deals in recent months to spend millions of taxpayer
dollars to purchase electricity, they signed agreements not to reveal the
terms of those contracts to the public.
Even the state's chief energy czar admits the confidentiality clause
conflicts with the public's right to know how its money is spent, and that
officials are trying to get around it. But the clause gives sellers veto
power over releasing information.
``Our hope would be to release these contracts, but we can't release them, at
least our lawyers tell us, without consent of the parties,'' said S. David
Freeman, who acknowledged the agreements for the first time Wednesday.
Consumer advocates voiced outrage.
``There's no such thing as a non-disclosure agreement with regards to
taxpayer money,'' said Doug Heller of the Foundation for Taxpayer and
Consumer Rights.
The administration's secret electricity spending has been a top concern among
lawmakers and public advocates since January, when the state stepped in to
buy power for its troubled utilities at a cost that has reached more than $70
million a day.
Freeman said Wednesday that the state was so pressured to sign contracts to
lock up lower-cost power supplies that negotiators never considered the
ramifications of the secrecy clause. He said violating that agreement could
void the contracts.
Would companies bail?
A representative for power companies said Thursday that he doubts companies
would bail on existing contracts but might not sign more.
Without seeing details of the spending, lawmakers this month approved a
record $13.4 billion in ratepayer-backed bonds to cover power costs that have
reached nearly $8 billion. Critics question whether the state is getting a
good deal and wonder whether the bonds will cover the costs.
Until now, Gov. Gray Davis has answered critics by arguing that revealing the
deals would jeopardize the state's bargaining position, exposing ratepayers
to even higher costs. Critics said the administration never before mentioned
confidentiality clauses.
``These contracts have been out there for a couple of months and this is an
excuse I've never heard before,'' said Mindy Spatt of the Utility Reform
Network, a consumer group. ``It makes me wonder whether they've really got a
good reason or something they're trying to hide.''
The state routinely enters into contracts in other areas, and those contracts
are governed by public-records law and open for review. But Freeman suggested
new rules may be in play.
``Businesses don't reveal their contracts, and the state has gone into the
business of buying power,'' Freeman said. ``I recognize that if the state
does something that people have a right to know about it. On the other hand,
if the government is acting in an emergency way as businesses do, there's a
clash.''
Freeman said the administration plans to reveal the contracts ``in the very
near future'' and is working to find a way around ``this legal problem'' with
the confidentiality clause.
``We have nothing to hide,'' Freeman said. ``We're very proud of those
contracts.''
2003 release date
But in response to lawsuits from news agencies and lawmakers seeking to
compel disclosure, the administration has argued it shouldn't reveal the
contracts until Jan. 1, 2003, when they are no longer commercially sensitive.
The state's power-buying authority ends on that date.
News agencies, whose case will be heard Friday, say there's no evidence
disclosure would jeopardize the state's bargaining position, and that the
secrecy serves the governor's political interests more than the public's.
Alonzo Wickers, a lawyer for the news agencies, including the Mercury News,
said the administration hasn't made an argument based on confidentiality
clauses, and that the law wouldn't support that claim.
``The courts have said you can't do that if you're a public agency,'' Wickers
said.
Jamie Fisfis, spokesman for Assemblyman Dave Cox, R-Sacramento, said the
confidentiality argument is ``frankly outrageous.''
``If he signed a contract to build roads, would he then argue he couldn't
disclose it?'' Fisfis said.
Daily deals costly
The contracts guarantee a supply of power at costs below today's high market
prices, helping to avoid rolling blackouts and limit rising rates. Without
the deals, the state must scramble to buy power day by day at much higher
prices.
The administration has signed dozens of contracts ranging from several months
to a decade or more, and said the average price over 10 years is 7.1 cents
per kilowatt-hour, a bargain compared with the 20- to 30-cent daily rates.
Even with the contracts already signed, the state still will have to buy half
to two-thirds of its power day by day this summer. It's unclear how many
sellers might walk away from deals if the state discloses them.
A spokesman for Calpine of San Jose, which has signed two, 10-year contracts
and another for 20 years, said it already has revealed the basic terms and
wouldn't oppose further disclosure.
``I don't know any reason for us to get upset,'' said Calpine spokesman Bill
Highlander. ``We came in at a very attractive price that we think is good for
California and good for us.''
A representative of several major power sellers said companies probably
wouldn't walk away from deals they've already signed. But he said
confidentiality is important.
``It certainly would drive away people from doing deals like this in the
future,'' said Gary Ackerman, executive director of the Western Power Trading
Forum. ``It's just not professional.''

Contact John Woolfolk at jwoolfolk@sjmercury.com or (408) 278-3410

California Gov. Davis blasts Bush energy policy
NEW YORK (Reuters) - California Gov. Gray Davis on Thursday blasted President
George Bush's energy policy, saying in a newspaper op-ed piece that the
president is setting a ''perilous'' course by opposing caps on wholesale
electricity prices.
Davis, writing in The New York Times, likened California's long-running
energy crunch to the U.S. energy shock in the 1970s and said the Bush
administration ``must adopt a more responsible energy policy.''
The comments follow a meeting earlier this week between Davis and Bush that
underscored their differences on federal price caps. Bush reiterated his
opposition to caps on wholesale electricity prices at the meeting, Davis
said.
Davis called caps necessary to prevent price-gouging by power companies,
while Bush asserted that caps will make the situation worse by discouraging
investment in new power plants.
The governor told President Bush on Tuesday that he would seek a court order
to force action by the Federal Energy Regulatory Commission (FERC).
In his op-ed piece, Davis cited an estimate that the size of California's
energy crisis is likely to be in the range of $40 billion to $50 billion this
year.
Defending his own methods of dealing with the power crisis, which has caused
rolling blackouts in the state, Davis said only FERC has the power to ensure
a reasonable wholesale electricity market in California. ``This is not a
matter of discretion for federal regulators,'' the Governor wrote, ``It is an
obligation.''
Davis acknowledged that California's power problems stemmed from ``a
fundamentally flawed'' 1996 state electricity deregulation law, and he
repeatedly raised the specter of economic turmoil brought on by policies
favored by President Bush.
``The threat is real,'' Davis wrote, ``and the Bush administration must adopt
a more responsible energy policy, one that restrains energy price
manipulation and creates a fair and competitive energy market across the West
and the whole country.''

Mayor sees the light on power plant
Published Thursday, May 31, 2001, in the San Jose Mercury News
THE mayor standing on the tracks waving a red flag at the onrushing
locomotive has calculated the effects of a collision. Calpine's proposal for
the Metcalf power plant at the north end of Coyote Valley is now fine with
Ron Gonzales.
It's been fine with almost everybody else outside the immediate neighborhood
since the plant was proposed by Calpine and Bechtel more than a year ago. It
escalated from fine to urgent as the shortage of electricity pushed prices
into the clouds and led to blackouts.
In the process, the opposition of Gonzales and the San Jose City Council, on
thin factual ice from the start, couldn't withstand the weight of the forces
in favor of the 600-megawatt plant, enough to serve 600,000 homes.
The Legislature and Gov. Gray Davis wondered what San Jose could be thinking.
The California Energy Commission has the last word on power plant siting
regardless of the city's position. Denial would be flabbergasting.
Wednesday afternoon, Gonzales yielded gracefully; Calpine, along with its
partner Bechtel, triumphed politely. The city will ``provide all requested
municipal services in a timely matter.'' And it won't sue to overturn Energy
Commission approval.
Calpine will add two stations to monitor air quality, reduce the number of
pollution-creating stops and starts at the plant, give $5 million for parks
in the area, and contribute $1.5 million for community programs, including
assistance with energy bills.
These are not trivial additions to the original proposal. But Calpine/Bechtel
held all the cards. Almost certainly, it could have jammed the plant through
without sweeteners.
Instead, both parties recognized that Calpine and the city must do business
together for the plant to work well. Calpine depends, for instance, on
recycled water from the city's sewage treatment plant. And the city needs
customers like Calpine, which will consume 3 million gallons a day, to use up
that water.
It's a mutually beneficial arrangement, just as it was from the start.

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?

Gordon Dillow
gldillow@aol.com
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Building a new plant? More power to them
May 31, 2001
By GORDON DILLOW
Orange
County Register
As you probably know, the main reason we're in a power crisis in California
is because we haven't built enough power-generating plants. And one reason we
haven't built enough plants is NIMBY-ism: When faced with having a new power
plant nearby, most people shout "Not in my back yard!"
Well, I just found out that a new power plant is being built in my back yard.
And frankly, I think it's a dandy idea.
The power plant in question is being built at the county Olinda Alpha
Landfill in Brea. The plan is to take the methane gas formed by the natural
decomposition of refuse in the dump - which ordinarily would have to be
flared off -- and burn it in engines to produce electricity. Actually,
they've been producing power at the landfill that way for years, but now,
with power at a premium, a New Jersey-based company called Ridgewood Power
wants to expand the plant's output by about 50 percent.
True, the power plant isn't literally in my back yard; it's a couple of
ridgelines away. But it's still close enough for the Air Quality Management
District to recently send me a letter informing me of increased pollution
from the plant - and warning me that the plant emissions could cause cancer.
Now, ordinarily those would be the sort of grim tidings that would cause
palpitations in my homeowner's heart. So why am I being so welcoming to my
new power-generating, air-polluting neighbor?
Several reasons. First, it's a pretty tiny power plant. Even with the 50
percent production boost, it will only crank out 8 megawatts - enough to
provide power to about 8,000 homes, but still less than 1 percent of the
juice produced by one reactor at the San Onofre nuclear power plant.
Also, the increased air pollution hardly seems like enough to worry about.
For example, the AQMD says the plant will produce up to 9 pounds of fine
particulates per day - which is probably about the same amount of
particulates I release into the atmosphere when I burn a steak on the
barbecue. And according to the AQMD's calculations, I'd have to suck in the
plant's air for 70 years to run even a 1-in-1 million risk of developing
cancer from the emissions.
But the big thing in favor of the landfill power plant is that it's exactly
the sort of clever power-producing scheme we need right now. It takes
something we don't need - the methane from our garbage - and turns it into
something we desperately need: electric power. These days, every 8 megawatts
helps.
And now that I think on it, there's another, more personal advantage to
having the landfill power plant nearby:
Without requiring any real sacrifices on my part, it makes me feel like a
non-NIMBYist. So when they start looking around for a place to build another
power plant to help ease the energy crunch, I can strongly suggest - no,
demand! -- that they build it in somebody else's back yard.
Because I already have one in mine.

Watering down fun
Many summer activities in O.C. will be diminished by the electricity crunch.
May 31, 2001
Story by TIFFANY MONTGOMERY
Photos by MICHAEL KITADA
The Orange County Register

LEISURE WORLD resident Jackie Lane works out five days a week in the pool and
says she notices the 2-degree difference in the water temperature.
?
?

Many in Orange County will find the power crunch crimping their fun this
summer as some cities and groups slash pool hours, turn off tennis-court
lights, raise swimming-class fees and drop pool temperatures to cut utility
bills and conserve energy.
Two Orange County community colleges will switch from night to day football
games come fall, along with most of their 12-team conference. And Orange city
officials have even floated the idea of moving popular adult softball leagues
to weekend afternoons rather than weekday nights.
"If we need to save energy, I'm all for it," said Saddleback College
defensive back Derrick Waddell, 19, who prefers the excitement of evening
games. "I just never expected (the power crisis) to go this far that it would
affect a football game."
Athletic Director Tony Lipold said the college needed to cut utility bills,
and stadium lights are expensive - a $1,500 demand charge to turn them on
each month, then $45 an hour. Plus, the school wants the community to know it
is conserving.
"When people drive by the stadium and see lights burning, we don't want them
to say, 'Hey, what's going on?' " Lipold said.
Fullerton College will also switch to day games next season, and Santa Ana
has played in the afternoon for years. Orange Coast and Golden West colleges
share a stadium, so one team often plays in the day, the other at night.
An official with the southern section of the California Interscholastic
Federation, or CIF, which oversees high school athletics in the region, said
he has not heard whether high schools are giving up Friday night football
games.

HERE'S A SWITCH: Conservation efforts are apparent at Leisure World.

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In Seal Beach, the city has raised fees ($7 for residents and $12 for others)
for swimming lessons and recreation and lap swimming (50 cents) because the
Recreation Department's utility budget has jumped $21,000, a 123 percent
increase. Mission Viejo has stopped illuminating courts at the Felipe Tennis
Center on weekends and will open the Sierra Recreation Center pool this
summer for five hours during the day instead of eight.
Fullerton is raising tennis-court fees by $2 for peak hours and $1 other
times with its new budget in July to cover energy costs. Currently the fees
are $6 or $7 per hour depending on day and time. And the city of Westminster
and the Newport-Mesa Unified School District have shut off court lights all
together.
Newport-Mesa will also begin charging the cities of Newport Beach and Costa
Mesa for heating four school pools that the cities use for summer swim
programs. Mike Fine, the district's assistant superintendent of business
services, has calculated that it costs $24 a day for each degree of heat.
As a result, Newport Beach is raising swim-lesson fees by $5 and will squeeze
most of its programs, including lessons and short periods for recreation and
lap swimming, into the Newport Harbor High School pool, which it will share
part of the time with Costa Mesa. The pool at Corona del Mar High School will
be open for lap swimming, but not heated.
"You can't teach swim lessons with kids (in a cold pool)," said Andrea
McGuire, Newport Beach recreation-services manager. "They turn blue, their
teeth chatter and they're not happy."
Newport Beach will also raise lap fees by varying amounts but keep recreation
swim costs the same.
Costa Mesa has decided to absorb the added cost of heating the pools,
estimated to be about $5,000 for the summer, instead of passing it on, said
Ruth Raheb, a recreation supervisor.
Colder pools have also affected swimming routines at Leisure World in Laguna
Woods. Temperatures at all six pools have been dropped 2 degrees, so some
have begun exercising in the afternoons when it's warmer, said Debby Lamb,
recreation director. Officials did keep one pool a toasty 84 degrees for
those with achy bones.
Alan Davis, 69, a heart patient, recently had to exercise in colder waters
while pool four, the warm pool, was being renovated.
"It was a shock to get into," he said. "If it's too cold it doesn't work well
with arthritis."
The warmer water, he said, soothes and restores his body, so he was happy
when pool four opened again last week.
The energy crunch has also affected the ceramics studio at Leisure World,
which draws about 300 people a week. Electric- and gas-powered kiln usage has
been cut back to save money.
"It's slowed us down," said Marjorie Amstadter, president of the Potters and
Sculptors Club. She estimates they are two to three weeks behind in firing,
but people have generally understood, she said.
"The only people who are complaining are non-Leisure World residents ... who
may have to wait until next fall (when classes start again) to pick up their
pieces," she said.
Those in charge of cutting or adjusting recreation programs said most people
have been very understanding about the energy crisis. After all, Californians
are already conservation minded: The state ranks 49th in per capita energy
consumption, according to a 1999 Energy Information Administration report.
Wally Johnson is one of the understanding ones. A fierce Saddleback football
fan, he has gone to 256 straight games and doesn't plan to miss one because
of a time change.
"I'll go to them anytime - daytime, nighttime, midnight, Sunday," he said.
"Day games are fun. They don't get quite so cold."

Energy notebook
San Jose mayor switches position, backs power plant
May 31, 2001
From Register news services
SAN JOSE After months of pressure, Mayor Ron Gonzales has reversed course and
decided to support a large proposed power plant in southern San Jose.
Gonzales said Wednesday that the companies that would build the $400 million
Metcalf Energy Center - Calpine Corp. and Bechtel Enterprises Inc. - have
agreed to donate money to community programs, offer long- term power
contracts at competitive rates to San Jose businesses, and take extra steps
to ensure the safety of the surrounding neighborhood.
Gonzales and the entire City Council in November voted against the
600-megawatt Metcalf plant on the grounds that it would be too close to
residential areas.
But as California's energy crisis deepened, Gonzales' position became
increasingly unpopular. Gov. Gray Davis, state representatives, county
supervisors and the Sierra Club called for the plant to be built.
The decision on whether the plant will be built now rests with the California
Energy Commission, which is expected to vote on the issue this summer.
New hydroelectric plant goes on line a year early
HEMET A new hydroelectric facility at a huge new reservoir began generating
power Wednesday, a full year earlier than planned.
The facility at Diamond Valley Lake will provide power for 13,000 households
initially and 40,000 households once the reservoir is completely full next
year, officials said. The lake is about three-fourths full now.
"This may just be a drop in the bucket for California, but we believe that
every little bit counts, especially this summer," said Phillip J. Pace,
chairman of the Metropolitan Water District board.
The facility is the first new hydroelectric generator in the state in six
years, according to the California Energy Commission.
Lab's Web site posts potential blackout data
BERKELEY Californians can now get their own information about whether the
lights will stay on without waiting for the Independent System Operator to
issue blackout warnings.
Residents can see supply and demand levels rise and fall before their eyes on
a new Web site put together by Lawrence Berkeley Laboratory scientists.
The site -- found at http://energycrisis.lbl.gov -- also shows statewide
power imports and exports and the capacity that's out of service on any given
day.
In other news:
California power reserves fell below 5 percent because higher temperatures
spurred demand for electricity to run air conditioners, prompting a state
agency to call an alert.
The California Independent System Operator, which runs the state
power-transmission system, called a Stage Two alert at 2 p.m. No blackouts
were necessary.
Forecasters say today will be even hotter, with the mercury rising to 100 in
San Bernardino.
Anaheim will only reach 82, because of an onshore breeze.
Gov. Gray Davis said Wednesday that he'll give federal energy regulators at
least 30 days to respond to his requests for massive electricity rebates or
rate cuts before taking them to court.
He said judges are "reluctant to tell agencies what to do until agencies
review the matter."
Bloomberg News, The Associated Press and Register staff writer Gary Robbins
contributed to this report.

Deadline near on regional power grid
State has until Friday to abide by FERC call to join transmission network.
May 31, 2001
By JOHN HOWARD
The Orange County Register
SACRAMENTO Gov. Gray Davis has until Friday to decide whether to place
California's 28,000 miles of electricity lines under increased federal
control by joining other Western states in a regional power grid.
The decision, which has provoked little public discussion, has long-term
implications for the way the state will be able to control its electricity.
Federal energy regulators believe creating about 18 huge multistate grids
across the United States - known as regional transmission organizations, or
RTOs - will make it easier to speed electricity across the country. That will
limit outages and lower prices for consumers, according to the Federal Energy
Regulatory Commission.
Critics of deregulation, however, contend the creation of an RTO in effect
turns over the state's lines to the Bush administration, which has close ties
to power companies that have profited mightily in California.
"The whole (FERC) plan is to federalize the transmission lines and federalize
energy policy, and to get the biggest state to commit to this scheme, (which)
would be a huge boost for Bush and his allies," said San Diego energy
consumer advocate Michael Shames.
The RTOs would have the authority to levy transmission charges on wholesale
power, subject to FERC's approval, and control the flow of electricity
throughout the grids. The FERC wants the RTOs up and running by December.
FERC has given California's three investor-owned utilities and the grid
manager, the Independent System Operator, until Friday to describe how they
would participate.
Davis, although not directly deciding the issue, wields influence over the
ISO board, which he appointed, and has been in negotiations with at least two
of the utilities. The reports to FERC are expected to largely reflect his
will.
Missing Friday's deadline could cause the Bush administration to halt the
so-called "soft cap" price controls currently on California's roiling
electricity market. But the threat that holds little worry for Davis.
Last month, FERC decided to set targets for power prices when state
electricity reserves fall to 7.5 percent or lower during Stage 1, 2 or 3
power alerts. Davis and others complained that the targets were "soft caps"
that could easily be ignored by power companies.
Stanford University energy economist Frank Wolak suggested that California
should refuse to join an existing RTO, but devise its own plan and present it
to FERC. Others agree, saying such a huge state could be a single-state RTO,
its grid managed internally but required to participate in the regional flow
of power.
That might better play into a proposal for the state to buy the transmission
lines from the utilities.
"I would basically say, 'Thanks, but no thanks,' and this is where FERC has
left a giant opening for California to do something clever,'' Wolak said.
Advocates of the RTOs say they represent the reality of geography and the
marketplace - not artificially created political borders.
"Markets are regional; they don't stop at the state border," said Elizabeth
Moler, a former FERC chairwoman.
Register reporters Kate Berry and Dena Bunis contributed to this story.

Thursday, May 31, 2001

Bush standing tall as Davis plays blame game
So Gov. Gray Davis had a short meeting and is going to sue to set price caps
on energy ["Bush: No price caps," Front Page, May 30]. What gives a judge the
power to set price caps on anything?
Going through an old high school yearbook, I found a gasoline receipt from
Wilshire Gas where I paid 25 cents per gallon. Why doesn't good old Gov.
Davis have the prices rolled back on everything? My first apartment in Santa
Monica was $150 per month, and I'm sure people would like to see apartment
rents rolled back to that rate.
However, to keep everything equal, the judge would also have to roll back
salaries to earlier levels of decades past. The latest trend is to go into
court and ask a judge to legislate what should be done. Doesn't anyone
question whether judges have the authority to do that?
I don't like higher prices, but how can a California judge order Pacific Gas
& Electric or Southern California Edison to sell power for one-third of what
it pays to bring energy from Idaho? Of course, both would go bankrupt and
shut down. Then, energy costs would go down because there wouldn't be any.
Stock up on candles.
Burl Estes
Mission Viejo
I have nothing but the utmost respect for President Bush for standing firm in
his refusal to implement price caps on wholesale energy prices. Even though I
personally stand to suffer from any electricity rate hikes passed on to
customers by Southern California Edison, I firmly support Bush's hands-off
policy and any other federal or state policies that help transfer price
controls to those of a free market: the basic controlling forces of supply
and demand. I remind all Californians that the whole reason we are suffering
energy problems today are past attempts to unnaturally control prices and
production. I will happily endure any rate hikes, even beyond 500 percent,
knowing full well that such rate increases are essential steps to our
recovery from the terrible effects of regulation and our so-called
"deregulation."
Dennis Chang
Seal Beach
Gov. Davis wants the Federal Energy Regulatory Commission to set price caps
for wholesale electric rates, but FERC refuses because it believes wholesale
electric rates are "fair and reasonable." Well, if Davis really wants price
caps, all he has to do is start charging all federal customers the actual
wholesale rate for electricity. Imagine if all the post offices, federal
courthouses, FBI offices, INS offices and IRS offices in California had to
pay the actual wholesale rate for electricity, plus assorted delivery
charges. That might get FERC to consider price caps. And it would put an end
to California subsidizing federal customers. The federal customers could not
complain because FERC says that wholesale electric rates are fair and
reasonable.
Douglas Ditonto
Yorba Linda
President Bush announced during his visit to California that he was opposed
to capping energy prices for fear that caps would only lead to more shortages
and higher prices for gas and electricity. Why does that sound more like a
thinly veiled threat from an extortionist than concern from a nation's
leader? I did not vote for George Bush. It seemed obvious to me that he would
be more inclined to support the views of the wealthy in this country,
particularly those of the oil industry, than those of the working class. It
appears that Bush will live down to my expectations.
Leslie E. Lyon
Anaheim

Electrical Emergency Stepped Up to Stage Two; Need for Energy Conservation is
Critical

FOLSOM, Calif.--(BUSINESS WIRE)--May 30, 2001 via NewsEdge Corporation  -
The California
Independent System Operator (California ISO) declared a Stage Two
Electrical Emergency today, Wednesday, May 30, 2001, at 2:00 p.m. with
operating reserves dipping below five percent. A number of factors are
contributing to today's emergency condition:
--  With higher than expected temperatures and the corresponding use

of air conditioning units, the demand for power is trending

approximately 1,200 megawatts over the forecast.
--  Net imports are running at 4,000 megawatts; 3,000 less than last

week.
--  A total of 9,800 megawatts worth of generation remains unavailable

today with power plants off-line because of preventative repairs

and plant malfunctions.

Consumers are asked to step up conservation efforts as the
California ISO's job of balancing the supply and demand for power
becomes more challenging this afternoon and into the evening peak
hours. Demand across the California ISO Control Area is expected to
peak at 36,174 megawatts around 3:00 p.m. this afternoon. Today's
Stage Two Emergency is in effect until midnight. With the Stage Two
declaration, the California ISO is able to access emergency resources
that will help maintain operating reserves.

A Stage Two Emergency is declared when operating reserves dip
below five percent or are expected to within the next two hours. If an
operating reserve shortfall of less than one-and-a-half percent is
unavoidable, Stage Three will be initiated. Involuntary curtailments
of service to customers, including "rotating blackouts," are possible
during this emergency declaration.

The California ISO is charged with managing the flow of
electricity along the long-distance, high-voltage power lines that
make up the bulk of California's transmission system. The
not-for-profit public-benefit corporation assumed the responsibility
in March, 1998, when California opened its energy markets to
competition and the state's investor-owned utilities turned their
private transmission power lines over to the California ISO to manage.
The mission of the California ISO is to safeguard the reliable
delivery of electricity, facilitate markets and ensure equal access to
a 25,526 circuit mile "electron highway."

Information about the California ISO control area's electricity
supply and the current demand is available on the web at
www.caiso.com.

Other helpful contacts:

Pacific Gas and Electric           415/973-5930

Southern California Edison         626/302-2255

San Diego Gas and Electric         877/866-2066

CONTACT: California ISO  |              Stephanie McCorkle, 888/516-NEWS

Washington's Role Helped Spark California's Power Crunch

WASHINGTON, May 29, 2001 (States News Service via COMTEX)  via NewsEdge
Corporation  - Although it is
popular in Washington to point the finger at California for its energy crisis,
the federal government shares a good deal of blame for the California energy
crisis.

In 1995, the Federal Energy Regulatory Commission helped lay the foundation
for
what has become the debacle of the new millenium when it rejected a state plan
calling for new power plants that today would be providing 1,300 megawatts in
new electricity.

What's more, records from that year show that the regulatory commission
expressed "grave concerns about the need" for new power generation in the
state.

Had those power plants been built, they would be generating power for an
estimated 1.3 million homes at the wholesale fixed cost of between 3.5 and 6.6
cents per kilowatt-hour with binding, long-term contracts.

At the time, retail prices averaged 9 cents per kilowatt-hour, according to
FERC
documents.

In recent months, wholesale prices have been averaging between 12 cents to 13
cents per kilowatt-hour, according to California Public Utility Commission
spokesman James Hendry. During peak usage, those prices can reach 20 cents to
40
cents and at times have rocketed to a record $1.90 since last December.

"Everybody is saying those prices will go higher this summer," Hendry added.

Nevertheless, members of the Federal Energy Regulatory Commission -- known as
FERC -- have regularly blamed California for failing to build new power plants
to meet present power needs that have sparked energy shortages and higher
prices
throughout the West.

The commission also shares the widely held view that faulty legislation aimed
at
deregulating the state's power industry in 1996 is to blame.

Although FERC put limited price caps into effect on wholesale electricity on
Tuesday, the commission continues to resist broader demands to stabilize
prices
in the Western region, as has been sought by California Gov. Gray Davis, and
other lawmakers. They claim that FERC has ignored their responsibility to
ensure
that electricity rates are "just and fair."

President Bush has sided with FERC's limited price caps because he believes
that
market-oriented supply and demand is the only sure way to restore permanent
order to the crisis.

The messy trail of the Golden State's rolling blackouts and power failures
passed through Washington in January 1995 when several California utility
companies asked FERC to rule against the state's plans to build power
facilities
around the state.

As part of that plan, first announced in 1992, the California Public Utilities
Commission nailed down bids through a competitive auction process to build two
new geothermal plants, one wind farm, and the repowering of an existing steam
plant in Southern California. A "badly needed" gas-powered plant on the San
Francisco Peninsula also was called for.

All would have been up and running by 1999.

Had the plants been build, California's electrical utilities would have been
required to buy power from them under a long-standing policy first enacted by
Congress in 1978, the Public Utility Regulatory Policies Act. But two utility
companies protested, claiming they didn't need more electricity. Besides, they
said they could provide or purchase cheaper electricity elsewhere if needed.

California used "a flawed auction process," recalled Art Larson, spokesman for
Sempra Energy, parent company of San Diego Gas & Electric, when asked
about the
decision. "It didn't consider the least-cost bids," he said, because
California
mandated the use of renewable energy.

So, just two months before construction on the plants was to begin, Southern
California Edison and San Diego Gas & Electric filed a protest with FERC.
The
five-member regulatory commission approves rates for wholesale electric sales
of
electricity and transmission in interstate commerce.

Both utility companies argued that because the PUC favored renewable energy
generation, it ignored less expensive ways to provide electricity such as
gas-fired plants and other sources.

Southern California Edison also expressed concerns about California's efforts
to
deregulate the electric utility industry that soon would be approved the
following year. Such legislation would likely bring down energy costs, it
predicted.

Other parties also weighed in on the complaint, including the National Coal
and
Western Fuels Association, which claimed that Edison could purchase power from
out-of-state sources at 3 cents a kilowatt hour. Today, FERC and other critics
of California's electricity policies believe that the state relies far too
heavily on out-of-state sources.

California responded to the complaints by noting that it did approve gas
powered
turbines in its plans, but also wanted "clean" energy suppliers as part of the
state's environmental objectives. After factoring in the costs of controlling
pollution in California caused by other forms of energy production, the price
for electricity provided from alternative sources would be competitive, it
said.

California's argument fell of deaf ears and FERC sided with the utility
companies. In its ruling, the commission stated that California's auction
procedure violated the standards set by PURPA because the state explicitly
sought out renewable energy providers and ignored other sources in the bidding
process.

FERC added that "we have grave concerns about the need" for added electricity
in
California. It also cautioned that the fact that the state was moving toward
deregulating the electricity industry, "heightens our concern" about forcing
utility companies into long-term contracts.

FERC's controversial ruling, which was opposed by many independent energy
organizations, still disturbs Loretta Lynch, chairman of the California Public
Utilities Commission.

What derailed the effort to build more power "was not the actions of
California,
but instead the actions of FERC itself," she said last December when FERC
first
denied requests to place wholesale price caps on electricity in western states
and blamed California for not building enough power plants.

And how do the utility companies now feel about the power plants they fought
in
1995 when long-term contracts would have been had for a fraction of the cost
they are now paying?

"20/20 hindsight is a luxury," responds Larson of Sempra Energy. "But the
prices
were out of line in the 1990s."

By David Phinney

Energy Experts Say Solution to California Crisis is Inescapable/ Build More
Power Plants and Ensure Competition

ATLANTA--(BUSINESS WIRE)--May 30, 2001 via NewsEdge Corporation  -
As the Bush Administration
continues to face harsh criticism in California over perceived
inaction regarding the energy crisis, industry executives appear to be
lining up behind Bush's assertion that enhancing the availability and
reliability of the nation's energy supply is the long-term solution.

And they consider creating more supply while maintaining the
transition to a deregulated marketplace crucial, reports the May issue
of Energy Competition Strategy Report, published by Atlanta-based NHI
Publications.

One leading utility executive says the solution to the nation's
long-term supply problem is inescapable. "We need to build new power
plants. And those new plants will be built only if we allow the
competitive market to do its job," says William Hecht, chairman,
president, and CEO of Allentown, PA-based PPL Corp. Price caps - which
California is pushing for and Bush opposes - "reduce the incentive to
invest in new production and unnecessarily prolong and exacerbate the
current supply and demand mismatch," Hecht adds.

PPL is aggressively developing new power plants in Connecticut,
New York, Pennsylvania, Washington, and Arizona that will add more
than 4,000 megawatts of supply. Other members of the Washington,
DC-based Electric Power Supply Association, such as ABB Energy
Ventures of Switzerland and Zeigler Coal Holding of Ashland, KY, are
building new, unregulated merchant power plants.

Meanwhile, EPSA is asking Congress to enact legislation that would
allow federal eminent domain for transmission siting and establish a
standardized interconnection policy to make it easier for generation
companies to "get onto the grid."

Other highlights of this month's Energy Competition Strategy
Report include:
-0-
*T
-- A new energy market study finds that despite several major
setbacks, including California's ongoing crisis, the energy industry
still has its sights set on achieving full competition. Retail Energy
Markets (REM), produced annually by Xenergy, a Burlington, MA,
research firm, is featured in the report and includes a wealth of data
suggesting that, despite restructuring problems, the shift to
competition continues.
-- Get a detailed look at PowerSolution, a core technology
platform that helps energy companies manage their data by integrating
business applications, external trading partners, and legacy systems.
-- Regional utilities are forging loyalties with big commercial
and industrial chains through National Accounts programs that provide
value-added, one-stop customer service. Award-winning Southern Co.
shares its secrets to success.
-- Can fuel cells meet the growing demands for electricity? A
large energy company plans to build, operate, and maintain an electric
generation plant that will use six fuel cells to generate primary
electric supplies.
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Business/Financial Desk; Section A
In California, Blackouts Spur A Search for Home Remedies
By LAURA M. HOLSON
?
05/31/2001
The New York Times
Page 1, Column 5
c. 2001 New York Times Company
LOS ANGELES, May 30 -- For Evans Keller, a turkey farmer in the Central
Valley of California, the energy crisis has become a matter of life and
death.
For 17 years, he and his family have raised turkeys near Fresno, far from the
dot-com companies of Silicon Valley and the ''Baywatch'' beaches most
outsiders associate with the state. In his world, where daily summer
temperatures soar above 100 degrees on dusty ranches, Mr. Keller is forced to
use electric fans and fog-making machines to cool his one million turkeys --
or watch them roast in tin-roofed sheds.
But with energy experts forecasting more than 260 hours of blackouts this
summer and no relief in sight from regulators or politicians, Mr. Keller has
taken matters into his own hands. In April, he bought eight small generators
at Costco that he could hook up to tractors and use to keep the fans and
misters running when the Pacific Gas and Electric Company cuts his power.
Since then he has regularly conducted drills on the 14 farms that supply him
with turkeys -- 4 farms he owns and 10 run by independent contractors -- and
has spent weeks winnowing the routine down to 40 minutes, barely enough time
before the birds begin to wither under the searing sun.
''Believe me, we're not proud,'' said Mr. Keller, who said he had appealed
earlier this year, without success, to Pacific Gas and Electric for advance
warnings of blackouts. ''We'll do what we have to to protect our
investment.''
The energy crisis here has come to this: from tourist attractions in sunny
Southern California, to farmers who dominate the central region of the state,
to technology concerns up north, businesses are coming up with novel ways to
cope with what many fear will be an unpleasant summer.
The concerns are understandable given the issues that many businesses face,
including lost revenue and potential layoffs, as the state's power shortages
continue. ''The uncertainty is what kills you,'' Jerry Meek, utility
operations manager at Roche Pharmaceuticals in Palo Alto, said.
Trying to reduce that uncertainty, businesses are applying to the state's
Public Utilities Commission for exemptions from having their power turned off
this summer. (The deadline is Friday.) Last week, Gov. Gray Davis announced
that the state would begin a three-tiered warning system for residences and
businesses that are likely to be affected. The first warning will come two
days before a blackout; the second, one day in advance; and the final
warning, one hour before the lights go out.
A more radical approach is being suggested by Mike Briggs, a Republican
assemblyman from Fresno. He is asking the state to schedule potential
blackout days as much as months in advance so business owners know when their
turn is coming. ''It is scary what this has come to,'' Mr. Briggs said. ''But
this gives people options.''
Farmers in the Central Valley, for instance, have to order water for their
crops a day ahead. But if the power is off when the water shows up in an
irrigation canal, he said, ''they can't open the gates and the water flows
right past them.'' One business owner told Mr. Briggs that he spent $30,000
one month to lease two generators that were never used. ''He said it would
have been nice to know ahead of time so he could rent the generators for a
day,'' the assemblyman said.
Of course critics worry that burglars will know when the lights go out, too.
''Yes, there is the downside of more potential burglaries,'' Mr. Briggs said.
''But maybe people are willing to make that trade-off.''
Even those business owners who say they are currently protected from power
failures are making preparations -- just in case. The Legoland California
amusement park in Carlsbad, near San Diego, has an arrangement with its
utility, the San Diego Gas and Electric Company, to keep the lights on, said
a spokeswoman, Courtney Simmons. Still, she added, the park is prepared in
the event of a loss.
The contingency plan consists of keeping open the 3 rides, of the 20 total,
that are not powered by electricity, she said. Barbecues would be rolled out
to cook food, and the park's boulevards would be flooded with performers,
including singers, dancers, jugglers and musicians who will entertain until
the power comes back on. ''We are prepared for outages no matter what the
cause this summer,'' she said.
Many tourist attractions, including Disneyland in Anaheim, are already
prepared because they upgraded their systems in 1999, fearing a Year 2000
disaster that would threaten the power grid. ''A lot of these things were
already tested and documented,'' said Ray Gomez, director of communications
at Disneyland Resorts. ''We are skilled at emergency evacuations. Energy is
only one part of that.''
As part of its plan, Disneyland shored up its emergency operations center,
holding employee drills to turn on emergency power. This summer, Disneyland
will have employee volunteers who roam the park day and night, turning out
lights and replacing incandescent bulbs with more energy-efficient ones. The
park also works with the city of Anaheim, which supplies the park with power,
to conserve 5 to 10 percent, minimizing the risk of blackouts at all.
Oddly enough, Disneyland is reviving its Main Street Electrical Parade, a
29-year-old light show that had most recently been an attraction in Florida.
Leslie Goodman, a senior vice president for strategic communications for Walt
Disney Parks and Resorts, said the park had made sure that the parade did not
use energy when Californians need it most. The lights in the parade are
powered by battery, and are recharged during off-peak hours. But, she added,
despite what was a difficult decision and a potential public relations
nightmare, ''the show goes on.''
While most businesses make an effort to conserve (if for no other reason than
to save money as rates soar), some communities are giving corporations added
incentives. The city of Palo Alto, for example, has agreed not to cut off
power to Roche Pharmaceuticals as long as the company reduces energy
consumption by 15 percent within 30 minutes of an announced Stage 3 alert,
the state's most critical. Only once has Roche lost power, said Mr. Meek, the
company's utility operations manager. And that, he added, was because of a
mistake.
Roche has a plan to ensure that a blackout does not happen. Once Mr. Meek
gets an alert on his pager from a city representative (who can see how much
is being saved because the company has a real-time meter for the 15-building
campus), voice mail and e-mail messages are sent to more than 1,000 employees
asking them to turn off nonessential lights. The air-conditioning is changed
to raise the temperature in most areas to 78 degrees from a normal 72
degrees. Lighting in all offices is reduced, and some employees move from
their dark cubicles to the window-walled cafeteria to work, he said.
''The question is, do you treasure light or do you want your computer shut
down?'' Mr. Meek asked. If these measures do not reduce overall demand by 15
percent, Roche will switch on backup generators to power the laboratories.
Why? If laboratory tools are not properly shut off before a loss of power, it
takes days to recalibrate them, costing thousands of dollars and wasted time,
Mr. Meek said. ''My focus with the uncertainty is to do what we can to get
around it,'' he said.
One way that California businesses are seeking certainty is by appealing to
the state's Public Utilities Commission for relief. One commissioner, Carl
Wood, said in a recent interview that about half the customers who got
electricity from the state's three largest utilities were exempt from
blackouts because their services were considered essential, like fire
stations or hospitals, or because they shared power with an essential source.
No more than 60 percent of the state's customers can be exempted from
blackouts.
Recently, an exemption was granted for the Bay Area Rapid Transit District,
which runs 95 miles of commuter train service in the San Francisco
metropolitan area, Mr. Wood said. Pacific Bell Park, home of the San
Francisco Giants, has asked for one, too; that request is being reviewed.
''It can be extremely disruptive and expensive if there are lots of blackouts
this summer,'' he said. ''This is a big economic issue.''
Just imagine, he said, musing about how the summer could end: ''Disneyland
without rides?''