Please see the following articles:

Sac Bee, Thurs, 7/12: Enron files suit in contempt bid
Sac Bee, Thurs, 7/12: Davis' refund plan faces a tough road: Several experts
say it's unlikely the FERC will buy the state's figures
Sac Bee, Thurs, 7/12: Energy Digtest: UC, CSU, Enron extend contract
Sac Bee, Thurs, 7/12: Energy consultants failed to file disclosures, Jones
says
Sac Bee, Thurs, 7/12: Fudging at FERC: Feds must define 'just' energy
charges  (Editorial)
SD Union, Thurs, 7/12: Big customers want to shop around -- and there's the
rub
SD Union, Thurs, 7/12: Senate panel, energy firm fighting tough
SD Union, Thurs, 7/12: Energy firm scraps plans for plant in Chula Vista
SD Union, Thurs, 7/12: Governor tells FERC to be fair and then some
SD Union, Thurs, 7/12: Enron Corp. sues to block Senate from forcing document
release
SD Union, Thurs, 7/12: Regulators want broad, regional power markets
LA Times, Thurs, 7/12: Huntington Loses Battle on Generators
LA Times, Thurs, 7/12: Enron Gets 2nd Chance to Turn Over Documents
SF Chron, Thurs, 7/12: Coal futures to begin trading but analysts aren't sure
it'll heat up energy markets
SF Chron, Thurs, 7/12: Developments in California's energy crisis
SF Chron, Thurs, 7/12: Enron files suit over subpoena
Provider challenges move for documents
SF Chron, Thurs, 7/12: PUC cancels vote to drop voltage levels
PG&E tells commission its electric distribution system is already operating
at minimal power
SF Chron, Thurs, 7/12: Power regulators hold off on energy-savings plan
SF Chron, Thurs, 7/12: Regulators order utilities to form regional systems
Giant step toward national deregulation
SF Chron, Thurs, 7/12: Universities, Enron cut deal on electricity
Prices 5% below limited rate
Mercury News, Thurs, 7/12: Voltage cut won't work, PG&E warns
Mercury News, Thurs, 7/12: Energy dispute goes to court
Individual.com (AP), Thurs, 7/12: Regulators Look to Develop Markets
Chicago Tribune, Thurs, 7/12: For now, electricity crisis has dimmed
WSJ, Thurs, 7/12: Regulators Order Formation of Big Grids
To Optimize the Flow of Electricity in U.S.
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Enron files suit in contempt bid
By Emily Bazar
Bee Capitol Bureau
(Published July 12, 2001)
State legislators pressed forward with contempt findings against Enron Corp.
on Wednesday after the company failed to produce subpoenaed documents and
filed a lawsuit asking the court to intervene on its behalf.
Lawmakers on a special Senate committee investigating electricity price
manipulation warned that the voluminous lawsuit, filed in Sacramento Superior
Court, could have far-reaching implications for the Legislature's ability to
conduct investigations and make findings. A few even suggested the legal
action could trigger "a constitutional crisis" that could end up in the
California or U.S. supreme court.
"You are treading into the territory of asking a court to make judgment on
the rules and the law governing the rights of the Legislature," said state
Sen. Steve Peace, D-El Cajon. "It is a separation of powers issue of the
highest order."
Representatives from Enron, a power marketer based in Houston, said they are
merely concerned that the committee has violated their due process rights.
Enron and another company, Mirant, were initially found in contempt by the
committee June 28 for refusing to turn over thousands of pages of documents
that had been subpoenaed June 11.
But the committee offered the companies a reprieve. If they complied with the
subpoenas, signed confidentiality agreements and set up a document depository
in Sacramento by Tuesday, the contempt findings would be expunged.
Committee attorney Laurence Drivon reported at the hearing that Mirant had
complied with the requirements, and had set up a document depository in the
U.S. Bank building downtown.
Mirant spokesman Patrick Dorinson said 159,000 pages of documents had been
turned over in 44 boxes as of Wednesday morning.
As a result, the panel voted to purge the contempt findings against Mirant,
but said it would review the company's compliance again in about 30 days.
Enron, however, did not turn over any documents or sign a confidentiality
agreement since the last hearing, Drivon said, and negotiations yielded
little progress. On a 6-0 vote, the panel agreed to move forward with
contempt proceedings against Enron.
As early as next week, the committee will forward a report to the Senate,
which will vote on the contempt findings and levy punishments that could
range from jail time for company officials to steep fines.
The panel said Enron could still purge the contempt findings if it complies
with the subpoena before the report is forwarded.
But company officials fired back at the committee, accusing members of
unfairly singling out Enron and treating it differently from other energy
companies.
"It is exceedingly difficult to discern whether the committee's actions are
designed to uncover the facts underlying the price spikes in California's
wholesale electric power market, or to create a convenient political
scapegoat to shoulder the blame for California's policy mistakes," one
official wrote to the committee.
All along, Enron officials have said they have several objections to the
committee's process. They believe the panel is violating the Federal Energy
Regulatory Commission's jurisdiction in its investigation; that it isn't
entitled to documents that are stored outside California; and that it doesn't
have the right to the confidential information and trade secrets in the
documents.
They also argue that their due process rights have been violated because they
received no response to their written objections to the subpoena before the
June 28 contempt vote.
The committee chairman, Sen. Joe Dunn, D-Santa Ana, overruled most of their
objections Wednesday. However, Enron officials argued it's unfair for a
committee member to rule on their objections.
"It is a foregone conclusion that the objections are going to be overruled,"
Enron lawyer Michael Kirby said at the hearing.
Officials believe an impartial third party should determine the merits of
their concerns, which was a primary reason the company filed the lawsuit,
said Enron spokeswoman Karen Denne.
In the lawsuit, Enron seeks a court injunction to end contempt proceedings
until the company's objections "have been duly considered and ruled upon by
an impartial hearing officer."
But Dunn said the Legislature's investigations are different from court
inquiries, and so are its procedures. "The same due process concerns
applicable to a court proceeding are not equally applicable to an
investigation by the Legislature," he said.
He denied the committee had singled out Enron, and said he believes Enron's
lawsuit is really asking the court to force the Legislature to end its
investigation.
The committee is scheduled to consider contempt findings against other power
companies next week.
"Enron (has) raised, potentially, a constitutional crisis with this
litigation," Dunn said.
Constitutional scholar Clark Kelso said legislators clamoring about a
constitutional crisis may be exaggerating. But Kelso, a professor at McGeorge
School of Law in Sacramento, believes the suit should be dismissed because it
is premature. He said the contempt process is still under way in the Capitol,
and has yet to be acted upon by the Senate.
Reacting to Enron's claims that an impartial third party should hear its
objections, Kelso also disagreed. "A court is not going to hold a Senate
committee to the same standard of impartiality it would hold a judge to," he
said.

The Bee's Emily Bazar can be reached at (916) 326-5540 or ebazar@sacbee.com
<mailto:ebazar@sacbee.com>.

Davis' refund plan faces a tough road: Several experts say it's unlikely the
FERC will buy the state's figures.
By Dale Kasler
Bee Staff Writer
(Published July 12, 2001)
Gov. Gray Davis' defiant "see you in court" broadside to federal regulators
this week demonstrates that it's unlikely the regulators will deliver the
multibillion-dollar refund from wholesale power generators that Davis is
demanding.
Davis' team limped out of Washington empty-handed Monday, concluding two
weeks of fruitless refund negotiations with generators. Instead of the $8.9
billion he wanted, Davis got a $716 million offer from generators -- and a
conclusion by the Federal Energy Regulatory Commission judge who oversaw the
talks that California isn't entitled to anything near $8.9 billion in
refunds.
Judge Curtis Wagner plans to recommend that FERC hold a full hearing on the
state's refund claims but said he doubts the refunds would amount to more
than $1 billion. That sum is so small that Wagner said the refunds would be
canceled out by the unpaid debts owed to the generators.
State officials proclaimed the talks a victory of sorts. The governor's chief
negotiator, Michael Kahn, said "our positions were vindicated" because
generators for the first time put refund dollars on the table.
The governor says generators and marketers, in violation of a federal law
setting a "just and reasonable" limit on wholesale electricity prices, have
routinely overcharged California, plunging the state into a crisis that's
bankrupted Pacific Gas and Electric Co. and could do the same to Southern
California Edison.
Insisting they've done nothing wrong, generators and marketers said they
offered the refunds simply to put the matter behind them.
"It was to get rid of the litigation and investigations -- they're a huge
drag," said Enron Corp. spokesman Mark Palmer. He wouldn't say how much the
Houston-based marketer had offered.
Palmer and several experts said the state faces an uphill battle convincing
FERC that California is entitled to the mega-refund Davis wants.
FERC, which will make the final call on refunds, probably believes it's
helped California already by imposing price controls on wholesale
electricity, and may not be inclined to order huge refunds, said Larry
Foster, editor of the Washington newsletter Inside FERC.
"At some point the commission might say, 'We've done all we can do (for
California), and if you don't like it, go to court,' which is what the state
is going to do anyway," Foster said.
The governor said Tuesday that he will sue FERC if it fails to order $8.9
billion in refunds. "You order what you think is fair," he said. "We'll take
what you order, and we'll see you in court."
Undaunted by the threat, generators and marketers were chortling over remarks
by Wagner, who wrapped up the failed settlement talks by saying refunds
probably wouldn't top $1 billion.
Californians "got hammered" by Wagner, said Enron's Palmer. "The judge told
them, 'Look, your claim is bogus.'"
Wagner has retreated somewhat from his statement, telling the San Jose
Mercury News that he isn't sure what the final numbers would be.
Sources have said that at one point in the talks, he suggested a $4.5 billion
refund -- including $2 billion in cash and $2 billion in discounts on
long-term power contracts. But it wasn't clear how seriously anyone took that
proposal, and as the talks wound down the judge was clearly dismissive of the
state's insistence on getting $8.9 billion.
Experts say FERC probably will hold the formal hearing and employ a formula
Wagner recommended for calculating the refunds -- a formula that spells good
and bad news for both sides.
For one thing, Wagner will likely urge a formula based on the price-control
system FERC implemented last month -- something that could work to
California's advantage. The controls limit prices to a ceiling based on the
production costs of the least-efficient power generator in California.
But Wagner's plan would calculate production costs differently than FERC has
so far. He would employ a system that's significantly more favorable to the
generators, said John Stout, senior vice president with power generator
Reliant Energy Inc.
Also, Wagner would ignore alleged overcharges prior to last October. That
alone could wipe out about $2.9 billion in potential refunds, according to
the Independent System Operator, which runs California's power grid.
Suppliers say a full accounting of costs, particularly the skyrocketing
natural gas expenses, will show the prices they charged were fair. "The more
days of testimony you have, the stronger Wagner's case becomes, the
weaker-looking Davis' case becomes," said Enron's Palmer.
Nonetheless, California officials said a hearing could produce a refund in
excess of $1 billion.
"Any reasonable calculation is going to give you a much higher number than
that," said Severin Borenstein of the University of California Energy
Institute.

The Bee's Dale Kasler can be reached at (916) 321-1066 or dkasler@sacbee.com
<mailto:dkasler@sacbee.com>.

Energy Digtest: UC, CSU, Enron extend contract
By Claire Cooper
Bee Legal Affairs Writer
(Published July 12, 2001)
SAN FRANCISCO -- A truce was declared Wednesday in a legal dispute between
California's largest electricity user -- its university systems -- and Enron
Energy Services.
Both sides agreed "in principle" to extend their four-year contract by two
years, until March 2004. They have until Dec. 1 to negotiate a price and
other terms.
Early this year the Texas-based energy giant, which had been selling
discounted power directly to the University of California and California
State University, switched more than 24 campuses covered by the contract to
shaky public utilities, subjecting them to potential blackouts and price
hikes.
A federal judge ruled that Enron probably had violated the contract and
ordered the company to resume deliveries. But the 9th U.S. Circuit Court of
Appeals issued a stay and set the case for review.

Energy consultants failed to file disclosures, Jones says
By Amy Chance
Bee Political Editor
(Published July 12, 2001)
The Davis administration failed to abide by state ethics laws as it hired 45
outside consultants to help the state cope with the electricity crisis,
Secretary of State Bill Jones charged Wednesday.
While such consultants are required to file statements of economic interests
-- reports of outside income that might represent a financial conflict with
their responsibilities for the state -- Jones said a check by his aides
Monday found that none of them had filed the documents.
Although the administration began hiring consultants in January, Jones aides
said they were told that the state Department of Water Resources -- which has
handled the state's electricity-buying efforts -- only recently became aware
that the reports were necessary.
Jones released a copy of a June 15 memo in which the department notified
energy contractors that they were required to file the statement and
disqualify themselves from decisions that could affect their financial
interests. The memo was written one day after Jones demanded that two of Gov.
Gray Davis' consultants, Chris Lehane and Mark Fabiani, file
conflict-of-interest forms.
"It's a sad commentary when an administration only decides to comply with
ethics and anti-corruption laws after their violations have been exposed,"
Jones, a Republican who wants to challenge Democrat Davis for governor next
year, said at a Capitol news conference. "I am also deeply concerned that
when filed, the statements of economic interests will show that a number of
consultants have illegally engaged in policy discussions and decisions that
affect their personal finances."
Davis press secretary Steven Maviglio said Wednesday that all consultants
required to file the statement had done so or would do so within the required
30-day time period. But he was unable to produce any of the statements,
saying they would first have to be reviewed to remove home addresses and
other personal information.
Information provided by the state Fair Political Practices Commission on its
Web site states that the forms are public records that state agencies must
make available for "public inspection or reproduction during regular business
hours no later than the second business day after they are received."
Jones called on state Attorney General Bill Lockyer to investigate what he
called the administration's "blatant disregard for the state's
full-disclosure and conflict-of-interest laws." A Lockyer spokeswoman said
the attorney general would consider the request.
Maviglio noted that the statements, which fall under the purview of the FPPC,
are not Jones' responsibility as secretary of state. He said Jones is "on a
witch hunt on something outside his jurisdiction."
Jones said if consultants involved in negotiating billions of dollars worth
of contracts with electricity generators had financial conflicts, the public
has a right to know.
"The governor's insistence on secrecy throughout the energy crisis has
prompted increased public cynicism of their government," Jones said.
"Unfortunately, it appears that the cynicism is justifiable in this case."

The Bee's Amy Chance can be reached at (916) 326-5535 or achance@sacbee.com
<mailto:achance@sacbee.com>.

Fudging at FERC: Feds must define 'just' energy charges

(Published July 12, 2001)

The economists say that some of the record-high electricity prices that have
plagued California in the past 14 months are the result of generators and
traders exploiting flaws in a dysfunctional market to exert market power over
prices. The problem is that federal regulators have been slow to wake up to
reality and exert some power of their own to enforce the law.
The Federal Power Act is supposed to protect the public by keeping prices for
electricity "just" and "reasonable." With price limitations now in place
going into the future, the Federal Energy Regulatory Commission has done only
half of its job. Now it must do the other half by reviewing and remedying the
abuses of the past.
Gov. Gray Davis estimates that generators have overcharged California to the
tune of about $9 billion. Generators and traders, on the other hand, have
suggested refunding something less than $1 billion. Efforts at a settlement
have gone nowhere. So now FERC must settle the score, even if it means a
trial-like proceeding that puts the last year under a microscope, one
questionable transaction at a time.
While much of the political focus has been on price, the job of the
regulators is to consider both price and circumstance. An unjust transaction
is born out of broken market conditions, when the buyer has little choice but
to accept the price of seller who can move the market by his own actions.
When the price exceeds by many multiples the actual cost to produce power,
there is compelling reason to look for gouging.
Undoubtedly, there were times over the last year when generators and traders
weren't gouging California, as evidenced by records of some transaction
recently released by the state. During the winter when the price of natural
gas (the state's primary fuel for electricity) was high, there's a reasonable
explanation for high power prices. Yet last fall and last summer, when
natural gas was cheaper yet electricity was outrageously expensive, there's
reason to doubt that the market was working reasonably.
Reviewing the prices charged in the last year is a test case for FERC, one
that it has sought to avoid. It requires FERC to concede that it was not on
alert as California ventured into the uncharted world of deregulation.
Yet the future of electricity competition in California, and perhaps the
nation, depends on the federal government showing that it is able and willing
to do its duty to protect the public from unfair market conditions. Settling
this score also affects the math of potential deals to put Pacific Gas and
Electric and Southern California Edison back on their feet. The refund that
Californians are owed is likely somewhere between those $1 billion and $9
billion estimates. It's time for FERC to go find out the right amount.

Big customers want to shop around -- and there's the rub

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State energy contracts must be paid off by users in system By Ed Mendel
UNION-TRIBUNE STAFF WRITER  July 12, 2001  SACRAMENTO -- California
businesses are being hit by big electricity rate increases, some as high as
100 percent, and they would like to be able to shop around for cheaper
power.  But state regulators are poised to ban customer choice, or "direct
access" as it has come to be called, because they want to make sure that
enough customers remain with utilities to pay for state power purchases.
After a month of closed-door talks, the revelation that the state has signed
$43 billion worth of long-term power contracts at above-market prices helped
scuttle an attempt to work out a compromise in the Assembly.
"If the intent of the big customers is to leave the small customers paying
for those contracts, we are going to fight like hell," said Lenny Goldberg, a
lobbyist for The Utility Reform Network.
Jack Stewart, president of the California Manufacturers and Technology
Association, said large business users were offering to pay off the back debt
of Southern California Edison, estimated at $3.5 billion, in exchange for
direct access.
"I thought we were making a lot of progress until the information on the
contracts came out," Stewart said. "We really don't have a way of dealing
with those contracts."
Now Stewart is suggesting that direct access be slowly phased in over a
period of years and that the long-term power contracts be renegotiated,
perhaps with some being switched from the state to big-business users.
The manufacturers association and the California Chamber of Commerce helped
organize a business coalition, Californians for Energy Action, that wants a
cheaper alternative to power purchased for utility customers by the state.
"Many large and small California businesses have seen their electric bills
double," says a newspaper ad being run by the coalition this week. "These
cost increases are a burden that will cause consumer prices to increase, some
businesses to fail and jobs to be lost."
A rate increase approved by the state Public Utilities Commission for PG&E
and Edison customers in May fell heaviest on business users. The PUC said
that the average residential increase was about 50 percent, while the average
business increase was about 75 percent.
Legislation that authorized the state to begin buying power in January for
the utilities, who were crippled by a failed deregulation plan, bars rate
increases for residential customers who use up to 130 percent of the
baseline, the minimal amount deemed necessary for a household.
Senate President Pro Tempore John Burton, D-San Francisco, and other
legislators have argued that large businesses should bear most of the burden
of the failed deregulation plan because it was business, not residential
consumers, who pushed for deregulation.
Alan Zaremberg, president of the California Chamber of Commerce, said that
forcing businesses to bear a "disproportionate" rate increase will cost
everyone through higher prices for goods and services and possibly a loss of
jobs.
"If government didn't allow implementation of deregulation in the right
manner," Zaremberg said, "then we all have to find a solution. We are all in
this together, and that's residential and business alike."
The legislation that authorized the state to buy power also directed the PUC
to ban direct access power purchases, if the loss of rate revenue from the
departing customers would harm the ability to pay off a power bond.
The state plans to issue a bond of up to $13.4 billion in September or
October to repay the taxpayer-supported state general fund for power
purchases. The bond would be paid off by ratepayers over 15 years.
Last week, the Senate rejected a bill by Sen. Debra Bowen, D-Marina del Rey,
on a 19-12 vote that would have allowed businesses to shop for power if they
paid an "exit fee" to protect the bond payments. Business groups said the fee
was too large and would not result in lower power costs.
"I cannot carry a direct-access bill that makes it harder to sell the bonds
or that shifts costs from large users, who leave for cheaper power, to
smaller users and residential ratepayers," Bowen said.
Burton and Bowen have both criticized Gov. Gray Davis' plan to keep Southern
California Edison from joining Pacific Gas and Electric in bankruptcy. They
say the plan, which includes the state purchase of the Edison transmission
system, is too generous to Edison.
Both Burton and Bowen have suggested that an Edison bankruptcy may not be a
calamity. But in the Assembly, Speaker Robert Hertzberg, D-Van Nuys, launched
a drive for an alternative Edison rescue plan that was based on gaining
business support by offering direct access.
Hertzberg asked a former Democratic assemblyman, Phil Isenberg of Sacramento,
to try to work out an agreement among the various special interest groups:
business, labor, consumers and generators.
The basic plan considered by the Isenberg group would have left "core"
customers -- residences and small businesses -- in a regulated system
receiving power at stable prices from the generators and contracts retained
by the utilities.
Businesses and other large users, the "non-core" customers, would be free to
shop around for low-cost power by 2003 if they agreed to help pay off the
Edison debt.
The Edison rate increase for large users would be limited to 50 percent. The
PUC would create a "balancing account" to track costs, issuing a refund if
too much was collected or raising rates if revenue fell short.
Business and generator groups told Hertzberg last week that they reached
agreement on a general framework, with the exception of the state purchase of
the Edison transmission system and some other issues. But the consumer and
labor representatives opposed the framework.
Mike Florio of The Utility Reform Network said in a dissenting statement that
an across-the-board allocation of state power costs would be "clearly unfair"
and cause residential users to subsidize direct-access customers.
Hertzberg said he is considering some of the ideas in the framework presented
by the Isenberg group and may make a proposal in a week or two.
"We are looking at all the possibilities," Hertzberg said. "We are trying to
do some form of direct access within the current contract structure."

Senate panel, energy firm fighting tough

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By Bill Ainsworth  UNION-TRIBUNE STAFF WRITER  July 12, 2001  SACRAMENTO -- A
Senate panel moved a step toward holding Enron, an energy trading firm, in
contempt for refusing to turn over documents senators hope can shed light on
the state's soaring energy prices.  Enron fired back by filing a lawsuit
yesterday asserting that only the federal government has the authority to
investigate the power market.  The panel, which had previously reached
agreements with all the other major generators and marketing companies in
California, voted 6-0 to prepare a contempt recommendation for the Senate to
consider next week.  The Senate, which last issued a contempt citation in
1929, must approve any contempt recommendation. It then has wide-ranging
powers to impose fines or jail time.  The chairman of the Senate committee,
state Sen. Joe Dunn, D-Laguna Nigel, said that if Enron agrees to turn over
documents to the committee soon, then he will recommend that contempt
proceedings be dropped.  The Senate Select Committee to Investigate Market
Manipulation also decided yesterday to drop contempt proceedings against
Mirant, an Atlanta-based marketing company, because it had agreed to turn
over documents.  The dispute also touched on broader issues.  Enron, the
politically connected Houston-based marketing company, has been pushing
electricity deregulation throughout the world. Company chairman Kenneth Lay
is a friend and campaign contributor to President Bush.  Last month the firm
helped sponsor a congressional fund-raiser featuring the president, where
contributors in tuxedos and gowns dined and drank around a giant gold "W"
that reached to the rafters at the Washington Convention Center ballroom.
Enron has also helped shape Bush's energy plan. It is one of several major
donors accused of meeting secretly with Vice President Dick Cheney to draft
the plan.  Several senators on the panel disputed Enron's claim that only
federal regulators, and not the state government, could investigate the
electricity market.  Further, they blasted the company for saying that
California could not have access to documents stored outside the state at the
firm's Houston headquarters.  State Sen. Steve Peace, D-El Cajon, said the
company was so defiant that it looked suspicious.  "Your client doth protest
too much," he said to Enron's attorney, Michael Kirby. "One can only wonder:
What do you have to hide?"  But Kirby said the company merely wanted to
protect confidential information and get answers to its objections. That, he
said, is why it filed a lawsuit contesting the committee's power to seek
documents that Enron claimed would reveal trade secrets.  "We want it to make
a ruling and give us our day in court," he said.  Peace, however, took issue
with the lawsuit, calling it a dramatic escalation in the dispute over an
energy crisis that has cost the state billions.  "You just declared war on
this state's political system," he said.

Energy firm scraps plans for plant in Chula Vista

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Ramco says price limits would make it unprofitable By Kristen Green
UNION-TRIBUNE STAFF WRITER  July 12, 2001  CHULA VISTA -- Controversial plans
to build a power plant by Sept. 30 have been dropped, much to the liking of
city officials.  Ramco Inc. pulled out of the project yesterday, saying that
the Federal Energy Regulatory Commission's month-old price limits would
prevent it from making money.  "We are pleased, whatever the reason," said
Michael Meacham, Chula Vista's conservation coordinator.  The city opposed
construction of the 62.4 megawatt plant on Main Street, and had asked the
state to reconsider its June 13 decision. The plant was approved under the
governor's 21-day emergency procedure for siting what are known as peaker
plants, those that can be used when energy supplies dip dangerously low.  The
proposal was exempt from the California Environmental Quality Act, and city
officials maintained that allowing the plant to be constructed -- the fifth
of its kind in the Otay region -- would be an environmental injustice.  City
officials have been planning an appeal to the state Supreme Court, an action
that appeared to be their last recourse.  "Our council felt we were doing
what was necessary to protect the public health and safety," Meacham said.
Meacham said yesterday the council would still file the appeal because Ramco
officials could change their mind. They have permission to build the plant as
long as they are able to complete construction by Sept. 30.  Despite the
city's pleas, Ramco had, until now, moved forward with its plans.  But Ramco
consultant Dale Mesple said company officials recently had a change of heart.
They are worried that the California Independent System Operator won't pay
them and that FERC's price limits, which established formulas for maximum
prices during emergency and non-emergency periods, won't allow them to turn a
profit.  "There's no reason to run the plant, and no reason to build it,"
Mesple said.  The California Energy Commission received a letter from Ramco
yesterday announcing the San Diego company's decision not to build the plant.
Spokesman Rob Schlichting said Ramco is the first company to pull out of
plans to build a plant under the fast-track system.  Nine other peaker plant
projects are still on track, including two Ramco is building in Escondido and
one in another Chula Vista location. A tenth peaker-plant, a 49.5-megawatt
facility in Otay Mesa, was approved yesterday.  "The loss of this one peaker
plant is not going to be catastrophic," Schlichting said. "It's not going to
jeopardize the California grid or anything, but I'm surprised a company would
feel this way."

Governor tells FERC to be fair and then some

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Davis firm on demand for $8.9 billion refund By Ed Mendel  UNION-TRIBUNE
STAFF WRITER  July 11, 2001  SACRAMENTO -- Gov. Gray Davis had a tough
message for federal regulators yesterday after the failure of settlement
talks in California's bid to get an $8.9 billion refund from electricity
suppliers: "See you in court."  The governor said California will seek a full
$8.9 billion refund for electricity overcharges, even if federal regulators
award the maximum refund of $5.4 billion allowed under their guidelines.
"Our message is just order what you are going to order," Davis said of the
Federal Energy Regulatory Commission. "We believe you should order $8.9
billion. But you order what you think is fair. We will take what you order,
then we will see you in court."  Davis, joined by his negotiating team, made
the remarks at a news conference a day after two weeks of closed-door talks
with suppliers in Washington failed to reach an agreement.  An administrative
law judge made a recommendation to the regulatory commission that Davis' top
negotiator, Michael Kahn, chairman of the California Independent System
Operator, expects to result in a refund of more than $1 billion.  Davis said
that a revealing decision will be made by the commission, which he hopes has
embarked on a "new path" with the appointment by President Bush of two new
members, Pat Wood of Texas and Nora Brownell of Pennsylvania.  "Are they on
the side of consumers, as the federal power act envisions them being," Davis
asked, "or are they just there to do the industry's bidding, as they have so
often in the past?"  Kahn said rules adopted by FERC cut off the refund
period at last October, trimming $3 billion from the $8.9 billion overcharge
claimed by California dating to May 2000.  He said FERC has no jurisdiction
over municipal utilities, such as the Los Angeles Department of Water and
Power, that sold power to the state. The municipal districts overcharged the
state by about $600 million, according to Kahn.  As a result, he said, the
maximum refund that FERC could order for California is about $5.4 billion.
"We made it clear to everyone that if we did not settle for $8.9 billion, we
would seek redress in court for the remainder of the money above $5.4
billion," Kahn said.  Calpine of San Jose and several other generators have
expressed interest in the state's offer to negotiate one-on-one with the
state while the federal regulators consider their decision, Kahn said.

Enron Corp. sues to block Senate from forcing document release

\
objattph
By Jennifer Coleman ASSOCIATED PRESS  July 11, 2001  SACRAMENTO ) A Senate
committee investigating possible price gouging in California's energy market
voted Wednesday to ask the full Senate to find Texas-based Enron Corp. in
contempt for failing to comply with a subpoena for documents.  Just hours
earlier, Enron sued the Senate Select Committee to Investigate Market
Manipulation to stop the subpoena of its financial and electricity trading
records.  Enron attorney Michael Kirby said the company is prepared to turn
over 25,000 documents that were already in California, but that other
documents the committee wants are in Texas and out of the panel's reach.
Kirby filed 17 objections to the subpoena, including one that only the
Federal Energy Regulatory Commission has the authority to investigate
wholesale markets. The committee voted to overrule most of the objections.
The committee will prepare a report to the full Senate, recommending the
company be cited for contempt. If Enron turns over the records before the
Senate takes up the matter, the report will be shelved.  "They've sent two
things to Texas ) our money and these documents, and they're saying we can't
get either one back," said Laurence Drivon, special legal counsel to the
Senate committee.  The other subject of possible sanctions, Atlanta-based
Mirant Inc., agreed to turn over subpoenaed documents. The committee will
review Mirant's compliance in 30 days and could revisit whether to find it in
contempt.  Mirant spokesman Pat Dorinson said the company has turned over
159,000 pages of documents that were being transferred to a repository in
Sacramento to comply with the subpoena.  The company and the committee
reached an agreement Tuesday night on the confidentiality concerns, Dorinson
said.  Committee chairman Joe Dunn, a Santa Ana Democrat, said the
committee's investigation will continue despite Enron's "pure act of
intimidation. We're not going to back down."  Enron's suit, filed in
Sacramento Superior Court, said the company's financial papers are outside
the committee's jurisdiction because most of its operations and paperwork are
outside California.  That shouldn't matter, Drivon said, citing last year's
successful subpoena of out-of-state documents during the investigation into
the activities of former Insurance Commissioner Chuck Quackenbush. Previous
investigations have included documents subpoenaed from other nations, he
said.  Companies doing business in California cannot claim immunity from its
laws or oversight, Drivon and Dunn said. Houston-based Reliant Energy made
the same argument but then agreed to turn over 1,800 documents.  Enron's suit
also says Dunn's committee has not given the company a fair hearing, and the
committee has not followed due-process protections before seeking sanctions.
Not so, said Dunn and Drivon, adding that they negotiated with generators to
give them time to comply with the subpoenas. Proof of that, they said, comes
in the decision to give Williams, AES, Reliant, Dynegy, Duke and NRG an extra
week past Tuesday's deadline to turn over documents subpoenaed last month.
In a letter to Dunn, Steven J. Kean, an Enron executive vice president, said
several municipal districts were profiting from the power crisis. "Yet,
remarkably, the committee has inexplicably chosen not to include these market
participants in its investigations."  Enron officials are concerned the
purpose of the investigation, Kean said, is to "create a convenient political
scapegoat to shoulder the blame for California's policy mistakes and changes
in market fundamentals."  If the full Senate approves a contempt citation, it
will be the first time since 1929, when the Senate briefly jailed a reluctant
witness during a committee investigation of price fixing and price gouging
allegations involving cement sales to the state.  There are no set penalties,
Drivon said ) by law, "the Senate can take such action as it deems necessary
and appropriate."  Enron is one of the world's leading electricity, natural
gas and communications companies, with $101 billion in revenues in 2000. It
owns 30,000 miles of pipeline, has 20,000 employees and is active in 40
countries. During the first quarter of this year, Enron's revenues increased
281 percent to $50.1 billion.  It is well connected politically. It has
supported both President Bush and his father, President George H.W. Bush.
Last year, Enron gave more than $172,000 to politicians and campaigns in
California.  Last month the firm helped sponsor a congressional fund-raiser
featuring the president, where contributors in tuxedos and gowns dined and
drank around a giant gold "W" that reached to the rafters at the Washington
Convention Center ballroom.  Enron has also helped shape President Bush's
energy plan. It is one of several major donors accused of meeting secretly
with Vice President Dick Cheney to draft the plan.  Company chairman Kenneth
Lay is a friend and one of the largest campaign contributors to Bush and the
GOP. Several prominent members of the Bush administration hold Enron stock.

Regulators want broad, regional power markets

\
objattph
ASSOCIATED PRESS  July 11, 2001  WASHINGTON ) Despite California's problems
with electricity deregulation, the Federal Energy Regulatory Commission
reinforced its commitment Wednesday to developing broad, regional power
markets.  The FERC, which regulates wholesale electricity markets, directed
power grid managers in the Northeast and in the South to develop broad
regional power transmission management organizations.  By unanimous votes,
the agency rejected proposals in both regions of the country for smaller
geographical markets.  The FERC kicked back proposals for separate regional
transmission organizations in New England, New York and the mid-Atlantic
states. Regulators said the parties should develop a single regional
organization covering all three areas.  At the same time, the commission said
it wanted a broad organization covering most of the Southeast as well. In
both cases, the agency directed that a mediator help the regions develop the
new regional power market systems.  The commissioners have maintained that
large, regional power management organization are necessary if electricity is
to flow freely in a competitive marketplace.  "The actions will go a long way
toward facilitating ... more efficient regional power markets," said Lynne
Church, president of the Electric Power Supply Association, which represents
independent power producers.  The vote was the first on the issue since two
new commissioners ) Pat Wood and Nora Brownell, both appointed by President
bush ) joined the commission.

HUNGTINGTON BEACH
Huntington Loses Battle on Generators
Power: AES receives go-ahead to restart two shut-down units without a
restriction on out-of-state sales that the city had fought for.
STANLEY ALLISON and CHRISTINE HANLEYS
TIMES STAFF WRITER

July 12 2001

The California Energy Commission on Wednesday voted to allow giant power
company AES to move ahead with plans to restart two mothballed generators in
Huntington Beach even without the company's guarantee that it would sell the
electricity within the state.

The decision permits AES to begin operating the generators next month.

The 3-1 vote marks a defeat for Huntington Beach, which had agreed to AES'
plans only with the company's pledge that all electricity generated would be
used to ease the state's power crisis. In granting approval, energy
commissioners conceded that the deal does not come without potential harm to
the environment.

"We do not know the extent of the plant's contribution to the transport of
bacteria to the beach, which can result in beach closures and the loss of
recreational opportunities to beach visitors and commercial opportunities to
local merchants," the ruling says.

State officials said they decided to drop the restriction that AES sell power
within California to avoid more delays and help fulfill Gov. Gray Davis'
executive order that the state significantly boost power production over the
next year.

"It adds power that will make California's power grid more secure, and the
more power we can get, the more secure we are from rolling blackouts," said
energy commission spokesman Rob Schlichting.

AES originally agreed to the restriction. But the company demanded that it be
dropped after negotiations with the state over long-term energy contracts
broke down in June.

With no contracts, AES argued it should have the right to sell power produced
in Huntington Beach to whomever it wants.

Huntington Beach officials who lobbied hard for the sales restriction said
they felt betrayed by the decision.

They said the commission bowed to the demands of a corporation over local
concerns.

"AES got exactly what it wanted," said City Councilwoman Connie Boardman, who
testified at the hearing.

"There's a lot of impacts the residents of Huntington Beach put up with. The
energy crisis is the reason this project was approved so rapidly. Now that
seems irrelevant. I think it's a big waste of time."

An AES spokesman said the company would prefer to sell its power to customers
in California. But he acknowledged there is no guarantee the extra
electricity will remain in the state.

Councilwoman Debbie Cook said she fully expects AES to sell the power to
out-of-state companies.

"They're going to sell it where they can get the most money," Cook said.

"If they can sell it outside the state and resell it at a higher rate, then
that's what they're going to do."

The two 40-year-old generators, which have been out of service since 1995,
can produce enough power to supply 337,500 homes and represent almost 10% of
the 5,000 megawatts Davis has said he will bring into service this summer.

AES said the retooling of Unit 3 is 75% complete and it should be on line by
Aug. 7, and Unit 4 is 70% complete and could come on line a week later.

AES had also requested a 10-year license to operate the generators.

But the commission on Wednesday sided with Huntington Beach on that point.

The city lobbied for a five-year license and a five-year renewal if the
company complies with a host of laws and regulations.
Copyright 2001, Los Angeles Times <http://www.latimes.com>

Enron Gets 2nd Chance to Turn Over Documents
Energy: State Senate panel gives the electricity seller a way around a
contempt citation. But the company balks.
CARL INGRAM
TIMES STAFF WRITER

July 12 2001

SACRAMENTO -- Acting five hours after Enron Corp. sued to stop a legislative
investigation of its business practices, a state Senate committee Wednesday
gave the electricity wholesaler a second chance to turn over documents and
rid itself of a contempt citation.

But officials at Enron, a major player in the California power market,
brushed aside the gesture, saying it fell far short of meeting the company's
objections.

"Our position has not changed. . . . The issues we had at the beginning of
the hearing, we still had at the conclusion of the hearing," spokeswoman
Karen Denne said. The Houston-based electricity wholesaler claimed in a
letter to the Senate investigative committee that it was being singled out as
a "political scapegoat" for the energy mistakes of California officials.

In the suit, Enron charged that the committee's investigation went far
outside the law, an allegation denied by Chairman Joe Dunn (D-Santa Ana). He
also denied the scapegoat charge.

The lawsuit was filed in Superior Court 62 minutes before the select
committee investigating market manipulation was to finalize its earlier
finding of contempt against Enron.

Enron appears to be the last of eight power sellers to refuse to make
documents available to the committee. Seven others also had held out, but in
the last two weeks have said they will provide the records or are negotiating
to do so.

Dunn said the committee must examine the hundreds of thousands of documents,
including what Enron called its "most closely guarded secrets," to determine
whether price gouging occurred and whether remedial legislation is necessary.

Gov. Gray Davis and other officials are convinced that the wholesalers
overcharged the state $8.9 billion during the energy crisis. A federal
mediator has said the overcharges are closer to $1 billion.

But at Wednesday's hearing, an angry Sen. Steve Peace (D-El Cajon), a sponsor
of California's flawed 1996 deregulation law, charged that by suing the
committee, Enron was trying to "precipitate a constitutional crisis" between
the judicial and legislative branches of state government.

"You just went to war with the state of California and the people of
California!" Peace shouted at Michael Kirby, a San Diego attorney
representing Enron. "You are already at war economically. Now you are at war
politically."

Kirby replied that Enron was merely trying to defend its right to due process
against what he called unlawful violations by the committee.

He complained that Enron was held in contempt on June 28 but that the company
had never been given a chance to present its objections.

"An accused criminal has been given more opportunity to have a hearing on
their objections than I have [in this committee]," Kirby told the lawmakers.

Sen. Debra Bowen (D-Marina del Rey), also an attorney, told Kirby that
legislative subpoenas are far different than those issued in the court system
and are not subject to the same restrictions because lawmakers must deal with
policy issues, not matters of guilt or innocence.

In their suit and testimony to the committee, Enron representatives charged
the committee had ventured far out of its jurisdiction and that only the
Federal Energy Regulatory Commission could legally undertake a wholesale
price investigation and impose sanctions.

The committee asked for a vast array of documents, including those involving
business decisions and transactions in other states. But Enron claimed that
the committee had no authority to issue subpoenas outside California and that
the subpoenas themselves were flawed.

The company asked the court for an injunction against further investigation
by the committee and proposed that a "neutral" arbitrator or judge try to
fashion a compromise.

Dunn suggested that the lawsuit was an effort to intimidate the committee.
But he insisted it "will not impact our investigation."

Under contempt procedures, last used in 1929, the committee can find an
individual or entity in contempt. It then reports its recommendations to the
full Senate, which must ratify the committee's action. The Senate also can
impose sanctions, ranging from possible jail terms to heavy penalties.

Dunn offered Enron what he called a "middle ground" that would give the
company an opportunity to change its mind and comply with the subpoenas
instead of facing an immediate report to the Senate.

Under Dunn's recommendation, approved on a bipartisan 5-0 vote, the report of
Enron's failure to comply would be compiled and written, but it would not be
delivered to the full Senate until Monday at the earliest.

If Enron were to reverse itself and agree to provide the records the
committee wants, sign a confidentiality agreement and create a Sacramento
repository for its records, the committee would hold the report back.

If compliance continued, Dunn said, the committee's contempt finding would be
purged.

Dunn said he decided to give Enron a second chance because his "No. 1
priority is to get the documents. Contempt is the last resort."

Denne, the Enron spokeswoman, noted that the company recently established a
document repository in Sacramento for records of its California operations,
but not the disputed documents involving business elsewhere.

She contended that the confidentiality agreements proposed by the committee
failed to "guarantee that these documents would remain confidential."

Another wholesaler, Mirant, also had been held in contempt by the committee.
But Dunn said that since its June 28 citation, Mirant had become cooperative.
The committee agreed to review Mirant's citation in a month and possibly
erase it.
Copyright 2001, Los Angeles Times <http://www.latimes.com>

Coal futures to begin trading but analysts aren't sure it'll heat up energy
markets
BRAD FOSS, AP Business Writer
Thursday, July 12, 2001
,2001 Associated Press
URL:
<http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/07/12/natio
nal0435EDT0461.DTL>
(07-12) 01:35 PDT NEW YORK (AP) --
While the New York Mercantile Exchange believes it can stoke interest in coal
futures trading, analysts say this fossil fuel won't necessarily take off
like wildfire on commodities markets.
"It's gonna be real wait and see," said David Khani, a coal analyst for
Friedman, Billings, Ramsey Group Inc. of Arlington, Va.
Futures exchanges exist to transfer the risk of price volatility from people
who don't want it -- in this case, power producers or steel manufacturers --
to speculators who are willing to take a gamble on making profits from this
uncertainty.
One of the main reasons for doubts about coal as a commodity is that it has
little history of wide price fluctuations, a key ingredient in bringing
together buyers and sellers. And of the roughly 1 billion tons of coal burned
in the United States annually, 80 percent is bought through long-term
contracts, not on the daily spot market.
Skeptics also contend that the exchange is overestimating the industry's need
for coal futures, arguing that power producers are protected from price
swings by passing along higher costs to consumers.
But those assumptions were under assault as Nymex's Central Appalachian
futures contracts were to begin trading on Thursday.
The price of coal per ton doubled in a matter of weeks last winter in some
parts of the country, boosting the stock prices of coal companies just as
quickly.
Also, as more and more states deregulate electricity markets, power providers
like Mirant Corp., American Electric Power Company Inc. and Dynegy Inc.,
won't be able to hide behind laws allowing them to pass on higher costs to
consumers. Instead, they will be forced to become more competitive with one
another, said Andy Ozley, manager of fossil fuels for Atlanta-based Mirant.
"Welcome to the free market," he said. "The pace of deregulation will
encourage more and more activity on the exchange. At least that's the hope."
The swapping of coal contracts is not entirely new.
Energy traders, including Mirant, Enron Corp. and Aquila Inc., helped build
an international over-the-counter exchange on which some 1 million tons of
coal can switch hands on any given day. Some days, not a single transaction
takes place.
Just how much daily volume Nymex coal futures will add to the mix is
anybody's guess.
Nymex Executive Vice President Neal Wolkoff said, "If it starts in the low
hundreds and builds to maybe 5,000 contracts a day I think that would be
viewed as a successful marketplace.
"We don't expect this to approach anywhere near the size of natural gas and
crude oil," for which hundreds of thousands of contracts are swapped each
day, Wolkoff said.
At the very least, Wolkoff said, the Nymex coal futures will benefit the
industry by making a "transparent price reference" available to buyers and
sellers of both long- and short-term contracts.
But critics believe Nymex's coal futures will suffer the same low trading
volume that the exchange's electricity futures have since 1996.
"There will be a flurry of trading when it starts, though I'm not so sure
it's going to be a long-term success," said Howard Simons, a finance
professor at the Illinois Institute of Technology and a former commodities
trader.
The run-up in coal prices last winter occurred as demand outstripped supply.
Coal companies curtailed production and even closed some mines after a mild
winter in 2000 at a time when power producers sought a less expensive
alternative to natural gas, which had quadrupled in price.

Developments in California's energy crisis
The Associated Press
Thursday, July 12, 2001
,2001 Associated Press
URL:
<http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/07/12/state
1038EDT0155.DTL>
(07-12) 07:38 PDT (AP) --
Developments in California's energy crisis:
THURSDAY=
* No power alerts Thursday as electricity reserves stay above 7 percent.
WEDNESDAY=
* Enron Corp. sues state officials to stop a Senate subpoena of its financial
records in a dispute over alleged overcharges for its electricity sales to
California. The suit comes hours before the committee voted to ask the full
Senate to cite the Houston-based company for contempt.
The other subject of possible sanctions, Atlanta-based Mirant Inc., agreed to
turn over subpoenaed documents. The committee will review Mirant's compliance
in 30 days and could revisit whether to find them in contempt.
* State power regulators shelve a plan to save much-needed electricity by
slightly reducing the juice to common household appliances after a
misunderstanding with Pacific Gas and Electric Co.
Regulators at the state Public Utilities Commission were set to approve the
conservation measure at a meeting Thursday, but will postpone action, saying
"last-minute concerns" raised by PG&E have made the plan less attractive than
advertised. PG&E officials said they think the plan is a good one and are
baffled why the PUC is not passing it.
* California's two public university systems reach a tentative settlement
with Enron Energy Systems Inc. to buy cheap power, bringing to an end a
federal lawsuit accusing the Houston company of wanting to sell the
electricity at a higher cost.
* Secretary of State Bill Jones says dozens of energy consultants hired by
Gov. Gray Davis haven't filed required statements of economic interest. Jones
says as many as 47 consultants should have to file the statements. Oscar
Hidalgo, spokesman for the Department of Water Resources, says about 20
consultants have been told they have until Monday to file those forms.
* The Assembly Appropriations Committee approves a bill to create criminal
penalties for energy price gouging. The bill, by Lt. Gov. Cruz Bustamante and
Assemblyman Dennis Cardoza, D-Atwater, now goes to the Assembly for a vote.
* The state Energy Commission approves San Diego area "peaker" plant which
will generate 49.5 megawatts during high-demand periods. The CalPeak Power at
Border Project is the 11th peaker plant licensed by the commission under an
expedited review process.
* Davis helps celebrate the 25th anniversary of the California Conservation
Corps, particularly their participation in the PowerWalk energy conservation
program. The corps members have distributed more than 500,000 energy
efficient fluorescent light bulbs, and by summer's end will have distributed
more than 1.6 million bulbs, saving 100 megawatts.
* Shares of Edison International closed at $14.06, up a penny. PG&E Corp.
stock increases 20 cents to close at $13.75. Sempra Energy, the parent
company of San Diego Gas & Electric Co., closed at $27.49, down 18 cents.
* No power alerts Wednesday as electricity reserves stay above 7 percent.
WHAT'S NEXT=
* The Senate committee investigating possible price manipulation in
California's energy market meets July 18 to consider compliance by six energy
suppliers who had documents subpoenaed last month.
THE PROBLEM:
High demand, high wholesale energy costs, transmission glitches and a tight
supply worsened by scarce hydroelectric power in the Northwest and
maintenance at aging California power plants are all factors in California's
electricity crisis.
Southern California Edison and Pacific Gas and Electric say they've lost
nearly $14 billion since June 2000 to high wholesale prices the state's
electricity deregulation law bars them from passing on to consumers. PG&E,
saying it hasn't received the help it needs from regulators or state
lawmakers, filed for federal bankruptcy protection April 6. Electricity and
natural gas suppliers, scared off by the companies' poor credit ratings, are
refusing to sell to them, leading the state in January to start buying power
for the utilities' nearly 9 million residential and business customers. The
state is also buying power for a third investor-owned utility, San Diego Gas
& Electric, which is in better financial shape than much larger Edison and
PG&E but is also struggling with high wholesale power costs.
The Public Utilities Commission has approved average rate increases of 37
percent for the heaviest residential customers and 38 percent for commercial
customers, and hikes of up to 49 percent for industrial customers and 15
percent or 20 percent for agricultural customers to help finance the state's
multibillion-dollar power buys.
Track the state's blackout warnings on the Web at
www.caiso.com/SystemStatus.html <http://www.caiso.com/SystemStatus.html>.
,2001 Associated Press

Enron files suit over subpoena
Provider challenges move for documents
Lynda Gledhill, Chronicle Sacramento Bureau <mailto:lgledhill@sfchronicle.com>
Thursday, July 12, 2001
,2001 San Francisco Chronicle </chronicle/info/copyright>
URL:
<http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/07/12/
MN193079.DTL>
Sacramento -- In another escalation in the war between California and
out-of-state energy providers, Enron Corp. filed a lawsuit yesterday
challenging the Legislature's authority to subpoena company documents.
The suit came as a Senate panel investigating market manipulation voted 6 to
0 to move forward with a contempt motion against Enron. A report will be
forwarded to the full Senate early next week if the marketer continues to
refuse to comply with the subpoena.
"You just went to war with the state of California," Sen. Steve Peace, D-El
Cajon, told the lawyer representing Enron. ". . . You already initiated a war
economically; now you're in a political war."
The Senate committee investigating price manipulation found Enron and Mirant
Corp. in contempt last month for not turning over subpoenaed documents. The
finding against Mirant was vacated yesterday because it agreed to turn over
documents.
The committee, chaired by Sen. Joe Dunn, D-Santa Ana, requested documents
from power providers in early April. When the requests were ignored, the
committee issued subpoenas asking generators for documents covering business
plans, operations, risk management and investment strategies.
Peace argued that forcing a judge to decide the scope of the Legislature's
authority could provoke a constitutional crisis.
"You are treading into the territory of asking the court to make judgment on
the rules and the law governing the rights of the Legislature," Peace said.
"It is a separation of powers issue of the highest order."
But Michael Kirby, a lawyer hired by Enron, said the Houston company was
simply looking for due process.
"A subpoena is a subpoena and once you go that route you must comply with the
law," he told the committee. "We are entitled to some kind of hearing with a
neutral arbitrator. It was not our preference to file a lawsuit."
Kirby and the lawsuit cite several objections to the Senate's subpoena. These
include the confidentiality of the documents and whether a California body
can require documents from outside the state. Enron also says that only
federal regulators have the power to subpoena their records.
Kirby and members of the committee disagreed over the scope of what a
legislative subpoena covers versus one used in a criminal matter.
"I think there is a fundamental misunderstanding about our legislative
inquiry," Dunn said. "We are not drawing conclusions about guilt or
innocence. We want to see what fixes must be made in the law."
Kirby did say Enron has set up a depository in Sacramento and has 30,000
documents ready to be deposited, pending an agreement can be reached on
confidentiality issues.
But that is not good enough for committee members, who believe that Enron has
continue to evade the committee.
"We have no indication that Enron ever intends to comply with the subpoena, "
said Sen. Debra Bowen, D-Marina del Ray.
E-mail Lynda Gledhill at lgledhill@sfchronicle.com
<mailto:lgledhill@sfchronicle.com>.
,2001 San Francisco Chronicle </chronicle/info/copyright> Page A - 15

PUC cancels vote to drop voltage levels
PG&E tells commission its electric distribution system is already operating
at minimal power
David Perlman, Chronicle Science Editor <mailto:dperlman@sfchronicle.com>
Thursday, July 12, 2001
,2001 San Francisco Chronicle </chronicle/info/copyright>
URL:
<http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/07/12/
MN27161.DTL>
Faced with objections by Pacific Gas and Electric Co., the California Public
Utilities Commission called off a vote yesterday that would have allowed
power companies to lower the voltage levels they supply to their customers.
PUC Chairwoman Loretta Lynch promptly said she was exasperated by the
company's attitude, because until yesterday, she said, officials there had
appeared to be going along with the state's energy-saving effort.
Dropping the voltage carried by power lines by as little as 2.5 percent was
proposed last month by Bill Wattenburg, an engineer and consultant to the
Lawrence Livermore National Laboratory who said that the move could save
enough energy statewide to equal the output of a 500-megawatt power plant.
His proposal was supported by Energy Commissioner Arthur Rosenfeld and Robert
Kinosian, the PUC's energy adviser.
Officials at Southern California Edison and San Diego Power & Light Co. had
already agreed to make the move and the state PUC had been scheduled to vote
today on amending its voltage rules to permit the change.
But lawyers for PG&E filed a 10-page document with the commission on Tuesday,
saying that its electricity distribution system "is already operating at the
lowest voltages possible" and that it would take about three months to adjust
even 10 percent of its system's circuits.
"While some further voltage reductions can be made, substantial additional
peak demand power reductions are not available," the company told the
commission.
According to Wattenburg, the two big Southern California utilities could save
the equivalent of at least 200 megawatts and that PG&E could save an
additional 200 to 300 megawatts. Total electricity consumption throughout the
state during summer can reach as high as 40,000 megawatts.
The concept of lowering power line voltages in an attempt to save energy has
been applied by utilities in several other states, but it remains
controversial.
Michael O'Hare, an engineer and professor of public policy at the University
of California at Berkeley, insists that energy economies from voltage
reductions "are precisely zero" when they are applied to refrigerators,
air conditioners or "anything else controlled by a thermostat" because they
would merely run a little longer than they do with full voltage.
"In sum," O'Hare said in a recent comment to The Chronicle, "the promised
efficiencies from voltage reduction are either imaginary or subject to being
nibbled away by human compensating behavior" -- in other words, by people
using electric bulbs with higher wattages or by setting thermostats lower on
their air conditioners.
An electrical engineer who designs substations for Silicon Valley industries
and who asked that his name be withheld commented:
"The theory of voltage reduction is a bit of smoke and mirrors. Unless you
were looking at your lights when the reduction happened, you would not know
the difference, but the time it takes to make that morning coffee or create
some hot water when you are last in line for the shower would seem like
forever."
E-mail David Perlman at dperlman@sfchronicle.com
<mailto:dperlman@sfchronicle.com>.
,2001 San Francisco Chronicle </chronicle/info/copyright> Page A - 15

Power regulators hold off on energy-savings plan
JUSTIN PRITCHARD, Associated Press Writer
Thursday, July 12, 2001
,2001 Associated Press
URL:
<http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/07/12/state
0320EDT0111.DTL>
(07-12) 00:20 PDT SAN FRANCISCO (AP) --
State power regulators are poised to protect consumers from a problem they
don't yet confront -- phone companies trying to shut down their service
because they haven't paid for all the sodas, pizzas, and lattes they used
their cell phones to buy.
Cellular service providers in other countries -- notably Japan -- have rigged
their phones to bill some goods, and U.S. companies are eager to catch up.
But once they get around to offering such services, cellular providers in
California won't be able to disconnect subscribers whose fast-food gluttony
lands them with fat bills they can't pay. Not if the state Public Utilities
Commission has its way.
The PUC is scheduled to pass that "first-in-the-nation" consumer protection
at its Thursday meeting, according to President Loretta Lynch.
What the PUC will not be addressing is a plan to save much-needed electricity
by slightly reducing the juice to common household appliances. That plan was
shelved by a misunderstanding between the PUC and Pacific Gas and Electric
Co.
Lynch said the PUC was set to approve the conservation measure at Thursday's
meeting, but will postpone action due to PG&E's "last-minute concerns" that
make the plan less attractive than advertised.
Under the proposal, the state's three largest utilities would reduce the
voltage from 120 volts to about 117 volts. While that would have little
effect on individual lights and appliances, bundled together the savings
would reach hundreds of megawatts -- in a pinch, enough to avert rolling
blackouts.
PG&E officials said they think the plan is a good one and were baffled why
the PUC postponed debating it.
At issue are how much power the plan would actually save, how long it would
take to implement, and whether it might make some service less reliable.
PG&E promised hundreds of megawatts in savings within a month, but in papers
submitted late Tuesday reduced those expectations to 40 megawatts over a
three-month span, said Robert Kinosian, energy adviser to PUC President
Loretta Lynch.
"Every sort of thing in implementing this was more problematic than before,"
Kinosian told reporters Wednesday. "I thought that everybody was working on
the same page, until yesterday."
Lynch blamed PG&E for taking the shine off what appeared to be a sparkling
way to reduce electricity demand with little downside.
But Lynch misunderstood PG&E's comments, according to Les Guliasi, the
utility's director of regulatory relations. He said PG&E would happily reduce
voltage to save the 40 megawatts -- enough to power about 30,000 homes.
"I think she should read over the comments," Guliasi said. "We've been very
up front and forthcoming in these discussions."
Indeed, Guliasi said, PG&E already has implemented "voltage reduction" across
much of its system. Because of that, he said, there's not much more the
utility can squeeze out of the program.
The comments PG&E filed with the PUC Tuesday conclude that the utility "is
ready and willing to immediately implement the voltage reductions."
Now that won't happen before the PUC meets Aug. 2. At that meeting, Lynch
said, the commission might approve voltage reduction for Southern California
Edison and San Diego Gas & Electric Co. -- even if problems with PG&E are not
resolved.

Regulators order utilities to form regional systems
Giant step toward national deregulation
Christian Berthelsen, Chronicle Staff Writer
<mailto:cberthelsen@sfchronicle.com>
Thursday, July 12, 2001
,2001 San Francisco Chronicle </chronicle/info/copyright>
URL:
<http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/07/12/
MN167808.DTL>
In a move that pushes the nation farther down the path of deregulating its
power systems, federal energy regulators yesterday ordered that transmission
grids in the Northeast and Southeast be combined to form regional systems.
The decision represents a victory for marketing companies that buy, sell and
trade electricity. Power marketers such as Enron, based in Houston, which
have created a new kind of business buying power where it is abundant and
selling it where it is scarce, had fought for creation of the regional
systems.
They argued that utility ownership created a costly barrier to entry in many
markets and that more regional systems would better enable them to transmit
power over longer distances.
The Federal Energy Regulatory Commission has been slowly nudging power
interests toward the regional systems for two years. Yesterday, in a sudden
and aggressive demonstration of its intent, the commission ordered three
independent system operators covering 12 Northeastern states to form one
regional transmission group, and ordered four utilities in the Southeast,
including Southern Co. and Entergy, to form another system.
Under the latest federal orders, utilities that own or control power lines
will have to turn them over to nonprofit groups called regional transmission
organizations that will manage them. The groups would set rules for the
regional market systems and facilitate easier transmission of power across
state lines.
A similar move has been proposed in California, but California power grid
managers and utilities have resisted it, saying the market in the state is
broken and needs to be fixed before further deregulatory steps can be taken.
In a filing with the regulatory commission last month, the California
Independent System Operator, Southern California Edison and San Diego Gas &
Electric resisted federal attempts to push the state into a regional system
too quickly.
"Most of the rest of the West is leaning toward weak ISO/RTO structures that
give far too much power to marketers and not enough to the central
authority," said Mike Florio, a lawyer for The Utility Reform Network, a
consumer advocacy group. "We have seen where that got us in California."
E-mail Christian Berthelsen at cberthelsen@sfchronicle.com
<mailto:cberthelsen@sfchronicle.com>.
,2001 San Francisco Chronicle </chronicle/info/copyright> Page A - 15

Universities, Enron cut deal on electricity
Prices 5% below limited rate
Tanya Schevitz, Chronicle Staff Writer <mailto:tschevitz@sfchronicle.com>
Thursday, July 12, 2001
,2001 San Francisco Chronicle </chronicle/info/copyright>
URL:
<http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/07/12/
MN151542.DTL>
The University of California and the California State University systems won
their fight yesterday to prevent Enron Corp. from cutting off their
electricity and throwing them back to the state's utilities.
Although the universities had signed four-year contracts with Enron as
protection from the uncertainties of California's deregulation, the Houston
energy broker dropped service to the universities on Feb. 1 so it could sell
the power for more money elsewhere.
That left the university systems relying on Pacific Gas and Electric Co. and
Southern California Edison, which were struggling to survive and subject to
rolling blackouts.
The university systems won a court injunction ordering the service restored.
When an appellate judge suspended the injunction, the two sides got together
to reach an agreement.
"Our primary objective was to get restored as direct-access customers, and we
are now restored," said UC spokesman Chuck McFadden.
Until the contract expires March 31, 2002, the university systems will be
guaranteed power at prices 5 percent below the capped rate created under the
state's 1996 deregulation law.
Enron and the universities will also discuss a two-year contract extension.
Mark Gutheinz, chief of plant, energy and utilities for CSU, said the
settlement "will save us quite a bit of money in the long run, and it will
give us a more stable supply of power."
Peggy Mahoney, spokeswoman for Enron, said the company planned to take back
all its direct-access customers even before the agreement was reached.
"We are very happy that it is over. We have been working with them all
along," she said of the universities.
With UC's systemwide peak load at 332 megawatts and CSU's at 117 megawatts,
the universities together rank as the largest single user of electricity in
California.
E-mail Tanya Schevitz at tschevitz@sfchronicle.com
<mailto:tschevitz@sfchronicle.com>.
,2001 San Francisco Chronicle </chronicle/info/copyright> Page A - 15

Voltage cut won't work, PG&E warns
Published Thursday, July 12, 2001, in the San Jose Mercury News
BY MICHAEL BAZELEY

Mercury News

In a move that blindsided state regulators, Pacific Gas & Electric officials
have raised serious concerns about a novel plan to conserve energy by
reducing the voltage sent into homes and businesses.
Company officials told the Public Utilities Commission this week that its
electric distribution system is already operating at a low voltage level and
that any energy savings would fall short of expectations.
What is more, company officials said they would not be able to complete the
voltage changes for three months -- too late to help the state if hot summer
weather forces rolling blackouts.
At the urging of Gov. Gray Davis, the PUC was to consider today changing its
regulations to allow utilities to lower their voltage, possibly starting this
month.
Officials said they were stunned to receive a filing from PG&E Tuesday
afternoon raising concerns about the proposal. Scientists, the PUC and
utilities have been working on the voltage reduction plan for more than a
month, and PG&E voiced no major concerns before now, PUC officials said.
``It's quite unfortunate that even though we had a cooperative process . . .
those concerns were not submitted earlier,'' said PUC President Loretta
Lynch. ``It's derailed at this point so we can be serious about addressing
PG&E's concerns.''
Lowering voltage
The change, championed by scientist and talk show host Bill Wattenberg, would
crank down the voltage on the state's electrical grid from about 120 volts to
117 volts, a drop of about 2.5 percent.
State officials expected the reduction to go unnoticed by most users and to
conserve about 500 megawatts of power during peak periods -- enough to
possibly spare the state from blackouts on high-demand days.
About half that energy savings was expected to come from PG&E customers. But
in their filing with the PUC, utility officials said their system is
``already operating at the lowest voltages possible'' under current
regulations. The company said that, at most, it could probably reduce load by
about 40 megawatts.
``We are operating at the low end of the system,'' said Les Guliasi, director
of regulatory relations for the utility. ``We've been very up front and frank
with what we could achieve with these savings.''
Lynch's energy adviser, Robert Kinosian, said 40 megawatts is ``significantly
lower than what they said before.''
``If 40 megawatts is all we're going to get, should we even take the time to
do it?'' Kinosian said.
Southern California Edison officials also said their reductions would be
lower than state officials expected. John Ballance, director of network
engineering for Edison, said Wednesday the utility could probably shave 100
to 150 megawatts off its load with the lower voltage.
Disputing numbers
PG&E spokesman John Nelson said the utilities have insisted all along that
the 500-megawatt savings touted by Davis and others was unreasonable.
``All the utilities have disputed that number,'' he said.
Wattenberg, who has been helping PG&E test the voltage reduction idea, said
he doubted the utility was operating at the low end of the voltage range.
``That's funny,'' Wattenberg said from his Sierra home. ``I'm sitting here
with 122 volts.''
Kinosian said the PUC would study PG&E's concerns and might send inspectors
out to test the utility's system. If necessary, he said, state regulators
could go ahead with the reductions elsewhere in the state.

Contact Michael Bazeley at mbazeley@sjmercury.com
<mailto:mbazeley@sjmercury.com> or (415) 434-1018.

Energy dispute goes to court
Published Thursday, July 12, 2001, in the San Jose Mercury News
BY DION NISSENBAUM

Mercury News Sacramento Bureau

SACRAMENTO -- A Texas-based power company moved to thwart an investigation of
alleged price gouging in the electric industry by taking its case Wednesday
from the Capitol to the courthouse.
The legal action prompted angry lawmakers to accuse Enron of escalating its
dispute with the state.
``You just went to war with the state of California,'' a seething state Sen.
Steve Peace, D-La Mesa, told Enron's attorney at a hearing.
Enron's lawsuit forced the legislative investigation of alleged price gouging
into uncertain territory with some legal experts predicting that the issue
might have to be settled by the U.S. Supreme Court.
The lawsuit was the latest salvo in an ongoing political and economic battle
over billions of dollars companies such as Enron have made during the energy
crisis.
Enron filed its lawsuit in Sacramento Superior Court an hour before its
attorney was scheduled to appear before a Senate committee that two weeks ago
declared them in contempt for refusing to turn over thousands of pages of
documents.
The power company argued in its lawsuit that the committee had no authority
to subpoena out-of-state records or examine highly confidential trade
secrets. Lawyers also argued that the Legislature was treading on federal
oversight powers.
In a letter to committee chairman Joe Dunn, an Enron executive suggested the
probe had unfairly singled out his company to be vilified.
``It is exceedingly difficult to discern whether the committee's actions are
designed to uncover the facts underlying the price spikes in California's
wholesale electric power market, or to create a convenient political
scapegoat to shoulder the blame for California's policy mistakes,'' wrote
Steven J. Kean, Enron's executive vice president.
Dunn, a Democrat from Garden Grove, suggested Enron was trying to undermine
his investigation and spark a constitutional crisis by asking the courts to
overrule the Legislature.
``This first step into the litigation arena may be the first of many in an
effort to intimidate us out of completing the investigation,'' said Dunn.
``This raises the stakes dramatically.''
A few hours after Enron filed the suit, Dunn and his committee unanimously
reaffirmed a contempt finding and voted to send a report to the full Senate
next week. At that point, the Senate would have broad authority to decide how
to penalize Enron. It could vote to throw company executives in jail, as the
Senate did in 1929 during a price fixing investigation of the cement
industry. It could vote to fine Enron. Or it could decide on some other
penalty.
But Dunn and the other lawmakers gave Enron another chance to turn over the
kinds of documents other companies have given to the committee.
So far, a half dozen other companies have managed to avoid similar threats by
turning over, or agreeing to turn over, thousands of pages of confidential
papers.
On Wednesday, the committee withdrew a contempt finding against Mirant, which
turned over more than 100,000 documents.

Contact Dion Nissenbaum at dnissenbaum@sjmercury.com
<mailto:dnissenbaum@sjmercury.com> or (916) 441-4603.

Regulators Look to Develop Markets

July 12, 2001

WASHINGTON (AP) via NewsEdge Corporation -
Despite California's problems with electricity deregulation, the Federal
Energy Regulatory Commission reinforced its commitment Wednesday to
developing broad, regional power markets.
The FERC, which regulates wholesale electricity markets, directed power grid
managers in the Northeast and in the South to develop broad regional power
transmission management organizations.
By unanimous votes, the agency rejected proposals in both regions of the
country for smaller geographical markets.
The FERC kicked back proposals for separate regional transmission
organizations in New England, New York and the mid-Atlantic states.
Regulators said the parties should develop a single regional organization
covering all three areas.
At the same time, the commission said it wanted a broad organization covering
most of the Southeast as well. In both cases, the agency directed that a
mediator help the regions develop the new regional power market systems.
The commissioners have maintained that large, regional power management
organization are necessary if electricity is to flow freely in a competitive
marketplace.
``The actions will go a long way toward facilitating ... more efficient
regional power markets,'' said Lynne Church, president of the Electric Power
Supply Association, which represents independent power producers.
The vote was the first on the issue since two new commissioners _ Pat Wood
and Nora Brownell, both appointed by President bush _ joined the commission.

News
For now, electricity crisis has dimmed
Karen Brandon, Tribune staff reporter

07/12/2001
Chicago Tribune
North Sports Final ; N
Page 8
(Copyright 2001 by the Chicago Tribune)
The lights have been on all summer in California . Given the extent of the
ongoing energy crisis, this is considered a feat, but by no means does it
signal the end of the drama that is likely to be playing in the West for
years to come.
With demand down significantly and supply up, Henwood Energy Services Inc., a
power industry consulting and software firm, predicts California won't face
any more blackouts.
"We're now saying there's a fairly good chance we should be able to avoid
blackouts this summer," said Richard Lauckhart, senior project manager in
Sacramento. In March, the company predicted California would be plagued by
300 hours of blackouts over the summer.
Still, he cautioned, the energy crisis in the West isn't over. "The financial
and political crisis is going to drag on for a long time," he said.
Indeed, many analysts say the real test of all the measures being taken to
keep demand down and supply up is yet to come.
"We shouldn't take too much comfort that we had a pretty good June," said
James Bushnell, co-director of the University of California -Berkeley Energy
Institute. "June is usually pretty good. August and September are peaks."
The last blackout in California was May 8; the only outage since then briefly
hit parts of Las Vegas.
California has fared much better this summer than anyone expected.
The demand for electricity is down, the result of myriad efforts to conserve
electricity , including making deals to close aluminum companies that are
huge electricity users in the Northwest and letting some farms lie fallowto
use less water.
Even the economic downturn may be playing a role, analysts said. "We don't
know whether it's just the fact that the economy slowed down, and the timing
was right, or incentives and exhortations to be good citizens and conserve
helped us squeak by," said Bushnell.
In California , usage is down 12 percent from June 2000 to this June, even
with differences in weather taken into account. During peak periods, usage is
down by 14 percent. The state is considering a plan that would allow
utilities to reduce the voltage slightly to homes and businesses during peak
periods.
At the beginning of the year, when the crisis seemed to be at its peak, many
old plants were under repair, and power providers were suspected of
withholding power to inflate prices. Since then, repairs have been made, and
federal and state oversight of plants has increased.
Federally imposed price limits have helped to moderate electric bills. "I
don't think the [wholesale] price has gone for $95 a megawatt hour," said
Paul Joskow, director of the Center for Energy and Environmental Policy
Research at the Massachusetts Institute of Technology. "Last year, you could
have gotten over $700."
In Northern Illinois, wholesale electricity prices in Commonwealth Edison
Co.'s territory were about $36 per megawatt hour in June, according to Platts
Energy Trader.
Prices in California have been volatile. June 1998 was the cheapest month for
electricity purchases that year, with rates averaging $12 a megawatt hour,
compared with $90 a megawatt hour that was the average this June, Bushnell
said.
"They're not out of the woods yet since it can still get hot in California
and the West," Joskow said. The price "depends a lot on the weather."
The political situation is already very hot. The lights may be on, but
Californians are beginning to realize just how much they are paying. State
leaders who once debated what to do with a budget surplus are contemplating
the financial repercussions of the electricity crisis.
In January, California began buying electricity for the customers of the
state's largest utilities, which have been financially crippled because they
had to buy power at high prices and could not pass on the increases to their
customers.
But the electricity purchases are draining the state's coffers. As details of
the state's $43 billion purchase of long-term electricity contractsemerge,
many are questioning the deal, and the prospect of renegotiation looms.

Economy

Regulators Order Formation of Big Grids
To Optimize the Flow of Electricity in U.S.
By Rebecca Smith

07/12/2001
The Wall Street Journal
Page A2
(Copyright (c) 2001, Dow Jones & Company, Inc.)
The Federal Energy Regulatory Commission said it wants four big
electric-transmission organizations formed that will optimize the flow of
electricity in the Northeast, the Southeast, the Midwest and the West. The
push to consolidate the operation of high-voltage transmission systems is an
attempt to create a solid foundation for competitive power markets that have
been sullied by California 's market failure.
The commission said it wants utilities and independent grid operators in the
Northeast and Southeast regions to meet with FERC mediators within one week
and hammer out plans within 45 days to form two broad organizations to
centrally manage power markets and energy flows in the East. The action
illustrates the FERC's frustration with the slow pace of
electric-transmission consolidation and is expected to be followed by similar
orders for the Midwest and the West.
The federal orders are intended to accelerate development of
electric-transmission organizations that the FERC endorsed in a landmark
decision called Order 2000 issued in December 1999. In that order, the FERC
urged utilities to voluntarily surrender control of their transmission
systems to grid organizations that would run daily markets for power and
manage power flows across multiutility regions. The agency said consumers
would benefit from larger, more efficient wholesale- electricity markets in
which transmission owners no longer would be able to give their own power
sales preferential access to the power-delivery system, snubbing lower-cost
competitors.
In addition, formation of regional transmission organizations, or RTOs, would
propel "postage stamp pricing" for transmission services, FERC said, so
suppliers could move power across vast distances for a single charge instead
of incurring "pancaked" costs as power traversed separately operated systems.
Commissioner William Massey described yesterday's directives as a "watershed"
because "never before have we been as explicit" about the FERC's resolve to
form big grid organizations "that can't be gerrymandered according to what
utilities want to do."
The FERC orders likely will face resistance in the Southeast, where states
haven't deregulated their retail electricity markets and where fear of
federal control is particularly acute. "My guess is that those states will
say, `We're happy with what we've got and with keeping control over our own
utilities,'" said Frank Wolak, an economics professor and power-markets
expert at Stanford University. "Any state that surrenders control to FERC,
after what's happened in California , isn't thinking clearly."
The directive also creates big problems for existing grid-running
organizations that thought they already were doing what the agency wanted.
Currently, New York, New England and the mid-Atlantic states each are
represented by separate, nonprofit independent system operators, or ISOs,
that operate transmission systems still owned by local utilities. PJM
Interconnection LLC, which controls power flows in the mid-Atlantic region,
is regarded as having the best market structure. The FERC said it intends the
PJM "platform" to be used as the basis of a single Northeast grid-running
organization.
That upsets the plans of the other two operators that have been working with
PJM to harmonize market rules and create a "virtual RTO" that would permit
suppliers to schedule power flows across all three ISO areas. Such a virtual
structure would preserve the underlying organizations, each of which has its
own control rooms, computer systems and governing boards.
Carol Murphy, spokeswoman for the New York ISO, said attempts to smooth out
market incongruities, or "seams issues," likely will be halted now. She said
her organization will participate in the mediated talks, as directed, but it
intends to conduct a cost-benefit analysis to determine whether consolidation
really offers substantial benefits.
Some market watchers had expected the FERC to compel utilities to surrender
operational control of their power lines to the independent operators by Dec.
15, as required in Order 2000, but only push them to merge into giant
regional organizations in three to five years. Commissioner Patrick Wood said
that approach seemed slow and wasteful. "These organizations aren't cheap to
set up," he said. "And why have eight or 10 organizations in the East when a
couple will do?"
The FERC actions also show the commission is becoming more confident about
the organizational structure it believes best for competitive markets. When
it began pushing electricity deregulation after 1992, the agency conceded it
didn't know which market design was best and encouraged experimentation. Mr.
Wood said the FERC's "glorious inattention to detail" is partly to blame for
California 's distress. He said the agency may establish field offices to
better monitor market health.
Mr. Wood said a FERC workshop last month aimed at eliminating seams issues
between the three Northeast ISOs convinced him that market participants are
"crying out for more leadership from FERC."


That's not funny!

---------------------- Forwarded by Gerald Nemec/HOU/ECT on 02/16/2000 01:05
PM ---------------------------
From: Eric Gillaspie on 02/16/2000 12:55 PM
To: Matt Gillaspie <matt.gillaspie@brentonbank.com> @ ENRON
cc: Ryan.F.Ruppert@EXXON.sprint.com, Gerald Nemec/HOU/ECT@ECT
Subject: RE: Photos of Coz

Cuzin'

Glad that the scabs have fallen off, have any schenkers surfaced?

Tenacious E


To confirm:

Mark Thomas
Mike Presley

both previously on the list for Netco's Market Risk/Research Group have resigned.

I'm combing the Estate for replacements.

DP


Attached are the schedules with my revisions redlined.


---------------------- Forwarded by Vince J Kaminski/HOU/ECT on 01/26/2001
04:37 PM ---------------------------

"Wydawnictwa Naukowo-Techniczne" <marketing@wnt.com.pl> on 01/25/2001
08:13:25 AM
To: <Vince.J.Kaminski@enron.com>
cc:
Subject: dot. odpowiedzi na list

Mam nadzieje, ze moja odowiedz na list Sz.Pana  z dn.19.01.01 doszla do Pana.
Byl on wysylany z niepewnego  komputera.
Jezeli nie doszedl, to prosze dac znac  (elektronicznie oczywiscie).
Serdecznie pozdrawiam
Grazyna Piesniewska


>
> >  GUEST OF HONOR:  Jesus Christ
> >
> >     DATE:   Every day.  Traditionally, December 25,
> >     but He's always  around, so the date is flexible.
> >
> >     TIME:  Whenever you're ready.  Please don't be
> >     too late though, or you'll miss out on all the fun.
> >
> >     PLACE:  In your heart.  He'll meet you
> >     there-you'll hear Him knock.
> >
> >     ATTIRE:  Come as you are.  Grubbies are okay
> >     as He'll be washing our clothes anyway.  He said
> >     something about new white robes and crowns for
> >     everyone who stays till the last.
> >
> >     TICKETS: Admission is free.  He's already paid for
> >     everyone.  He says you wouldn't have been able to
> >     afford it - it's cost Him everything He had!
> >
> >     REFRESHMENTS:  New wine, bread and a far-out
> >     drink He calls "living water."  This will be followed by
> >     a supper, that promises to be out of this world!!
> >
> >     GIFT SUGGESTIONS:  Your heart.  He's one of those
> >     people who already has everything else.  (He's very
> >     generous in return though - just wait until you see what
> >     He has for you !
> >
> >     ENTERTAINMENT:  Joy, Peace, Truth, Light, Life,
> >     Love, Real Happiness, Communion with God,
> >     Forgiveness, Miracles, Healing, Power, Eternity in
> >     Paradise.......and much more!  (All rated "G" so
> >     bring your family and friends)
> >
> >     RSVP:  Very Important!  He must know ahead,
> >     so He can reserve a spot for you at the table.
> >     Also, he's keeping a list of His friends for future
> >     reference. He calls it the "Lamb's Book of Life."
> >
> >     PARTY GIVEN BY:  His Kids.  That's us!  Hope To
> >     See You There!  Let us rejoice and be glad and
> >     give him glory!  For the wedding of the Lamb has come,
> >     and his bride has made herself ready.  Fine linen,
> >     bright and clean, was given her to wear.  (Fine linen
> >     stands for the righteous acts of the saints)
> >     Blessed are those who are invited to the
> >     wedding supper of the Lamb!
> >     --Revelation 19:7-9
> >
> >     ALL OF YOU WHO WILL BE THERE-PLEASE
> >     SHARE THIS INVITATION WITH SOMEONE ELSE.
> >