Today's news, and some from the weekend, in the following order:

A year later, energy crisis shows no signs of cooling off, By Ed Mendel , San
Diego Union Tribune April 30, 2001 (Quotes ???
???Smutny on behalf of IEP)

The Daily News of Los Angeles, April 27, 2001 Friday, Valley Edition, NEWS;
????Pg. N9, 275 words, PROPOSED LAW PUTS BOUNTY ON ENERGY MANIPULATORS, Staff
????And Wire Services (Quotes Smutny on behalf of IEP)

San Jose Mercury News, April 27, 2001, Friday, SJ-ELECTRIC-SUIT, 245 words,
????Santa Clara County, Calif., Joins Lawsuit against Electric Suppliers, By
????John Woolfolk (Quotes Smutny on behalf of IEP)

FERC Considers Imposing a Fee on Electricity Sales in California ?????
???Updated: Monday, April 30, 2001 12:40 AM?ET ????-- Dow Jones News Wire?
?
Los Angeles Times, April 30, 2001, Monday,, Home Edition, Page 3, 792 words
????, CAPITOL JOURNAL; ?CALIFORNIA AND THE WEST; ??How Sales Tax Is Falling
????Through a Loophole, GEORGE SKELTON, SACRAMENTO

Los Angeles Times, April 30, 2001, Monday,, Home Edition, Page 3, 1808
????words, CALIFORNIA AND THE WEST; ??THE CALIFORNIA ENERGY CRISIS; ??LIST OF
????PG&E CREDITORS SHOWS FIRM'S WIDE REACH IN BUSINESS; ??BANKRUPTCY: IT
????INCLUDES SMALL AND BIG COMPANIES, GOVERNMENT AGENCIES AND FORMER
EMPLOYEES.,
????TIM REITERMAN, TIMES STAFF WRITER, SAN FRANCISCO

Los Angeles Times, April 30, 2001, Monday,, Home Edition, Page 3, 1228
????words, CALIFORNIA AND THE WEST; ??THE CALIFORNIA ENERGY CRISIS; ??POWER
WOES
????COMPLICATE DISCUSSIONS ON BUDGET; ??FUNDING: GOV. DAVIS' PLAN FOR NEXT
YEAR
????FACES DEMANDS FOR BILLIONS AS A RESERVE AND TO CUSHION ELECTRICITY RATE
????HIKES., DAN MORAIN, TIMES STAFF WRITER, SACRAMENTO

Los Angeles Times, April 30, 2001, Monday,, Home Edition, Page 7, 839 words
????, COMMENTARY; ??WILL THE FERC SEE THE LIGHT ON THE LAW?, FRANK A. WOLAK,
????Frank A. Wolak, an economics professor at Stanford University, is,
chairman
????of the Market Surveillance Committee of the California, Independent System
????Operator

The New York Times, April 30, 2001, Monday, Late Edition - Final, Section
????A; Page 1; Column 5; Business/Financial Desk, 1444 words, While a Utility
????May Be Failing, Its Owner Is Not, By By RICHARD A. OPPEL Jr. and LAURA M.
????HOLSON

The San Francisco Chronicle, APRIL 30, 2001, MONDAY,, FINAL EDITION, NEWS;,
????Pg. A3, 1108 words, NEWSMAKER PROFILE; ???Nettie Hoge; ???Taking on power;
????Consumer advocate revels in uphill battle, Chuck Squatriglia

The Washington Post, April 30, 2001, Monday, Final Edition, A SECTION; Pg.
????A03, 1669 words, Energy Forecast for Summer: No Blackouts but Price
Spikes;
????Grid Managers Promote Conservation, Await New Plants, William Claiborne,
????Washington Post Staff Writer, CHICAGO

The Associated Press State & Local Wire, April 30, 2001, Monday, BC cycle,
????9:49 AM Eastern Time, State and Regional, 594 words, Developments in
????California's energy crisis, By The Associated Press

AP Online, April 29, 2001; Sunday, Domestic, non-Washington, general news
????item, 1313 words, Geothermal Plants Need More Steam, JENNIFER COLEMAN,
????MIDDLETOWN, Calif.

The Associated Press State & Local Wire, April 29, 2001, Sunday, BC cycle,
????State and Regional, 413 words, Guns in schools, deregulation delay on
????lawmakers' agenda, By BRAD CAIN, Associated Press Writer, SALEM, Ore.

Idaho Falls Post Register, April 29, 2001 Sunday, News; Pg. a1, 530 words,
????Plenty of blame to go around for West's power woes, PAUL MENSER

Los Angeles Times, April 29, 2001, Sunday,, Home Edition, Page 6, 1312
????words, THE STATE; ??HOW KILOWATT SOCIALISM SAVED L.A. FROM THE ENERGY
CRISIS
????, JEFF STANSBURY, Jeff Stansbury is a PhD candidate in American history at
????UCLA. His, dissertation is on the role of the labor movement in the
building
????of, L.A.'s infrastructure

Los Angeles Times, April 29, 2001, Sunday,, Home Edition, Page 4, 558 words
????, CONSERVATION SANDBAGS; ??THE DAVIS ADMINISTRATION NEEDS TO LAUNCH A
CRASH
????EDUCATION COURSE TO CONVINCE CALIFORNIANS OF THE SERIOUSNESS OF THE
????ELECTRICITY CRISIS AND THE NEED FOR FAR-REACHING ENERGY-SAVING MEASURES.

Los Angeles Times, April 29, 2001, Sunday,, Home Edition, Page 27, 1316
????words, BUSH: THE FIRST 100 DAYS; ??BUSH IS OFF TO A ROCKY START IN HIS
????HANDLING OF ALL THINGS CALIFORNIAN; ??POLITICS: BUT WHY WOO THE GOLDEN
STATE
????WHEN HE CAN'T CARRY IT IN AN ELECTION 'NO MATTER HOW HARD HE TRIES,' ONE
????ANALYST POINTS OUT., RICHARD SIMON, TIMES STAFF WRITER, WASHINGTON

Los Angeles Times, April 29, 2001, Sunday,, Home Edition, Page 2, 1290
????words, WEEK IN REVIEW; ??TOP 10 STORIES / APRIL 23-27, Lisa Girion and
????Terril Yue Jones and Sallie Hofmeister and James Bates and Peter Pae and
????Jeff Leeds and Nancy Rivera Brooks and Peter Gosselin

The New York Times, April 29, 2001, Sunday, Late Edition - Final, Section
????4; Page 17; Column 1; Editorial Desk, 756 words, Reckonings; The Real
Wolf,
????By PAUL KRUGMAN

Sacramento Bee, April 29, 2001, Sunday, Pg. A1;, 1323 words, Diesel plants
????spark concern They're expected to generate big air-quality problems when
????predicted summer blackouts hit., Chris Bowman and Stuart Leavenworth Bee
????Staff Writers

Sacramento Bee, April 29, 2001, Sunday, Pg. A1, 1544 words, Why Edison,
????PG&E split on strategy, Dale Kasler Bee Staff Writer

Sacramento Bee, April 29, 2001, Sunday, Pg. A3, 679 words, What will be
????fallout from California's energy meltdown?, Dan Walters

The San Francisco Chronicle, APRIL 29, 2001, SUNDAY,, FINAL EDITION,
????INSIGHT;, Pg. D1, 1419 words, The energy crisis is good for you, Louis
????Freedberg

Ventura County Star, April 29, 2001 Sunday, Editorials; Pg. B09, 704 words,
????Reality is what's needed for real policy ?GOVERNOR: Consumers deserve to
get
????real facts from Davis., Dan Walters

Los Angeles Times, April 28, 2001, Saturday,, Home Edition, Page 19, 679
????words, OFFICIALS CALL PRICE STABILITY PLAN ILLEGAL; ??UTILITIES: AGENCY
????CHIEFS SAY THE FEDERAL PROPOSAL COULD ALSO CAUSE MORE BLACKOUTS THIS
SUMMER.
????, NANCY VOGEL and MIGUEL BUSTILLO, TIMES STAFF WRITERS, SACRAMENTO

Los Angeles Times, April 28, 2001, Saturday,, Home Edition, Page 19, 688
????words, BILL COULD FOIL DAVIS' ELECTRICITY OFFENSIVE; ??POWER: CONGRESSMAN
????WANTS TO LET SMALL PRODUCERS SELL ON WHOLESALE MARKET. BACKERS SAY PLAN
????WOULD BOOST SUPPLY, BUT FOES SEE IT COSTING CALIFORNIA DEARLY., JULIE
TAMAKI
????and MIGUEL BUSTILLO, TIMES STAFF WRITERS, SACRAMENTO

Los Angeles Times, April 28, 2001, Saturday,, Home Edition, Page 2, 137
????words, BRIEFLY / ENERGY; ??PUC ORDERS UTILITIES TO POST BLACKOUT DATA,
Nancy
????Rivera Brooks

Sacramento Bee, April 28, 2001, Saturday, Pg. A3;, 1109 words, Cities take
????new look at public power The state's uncertain electricity picture has
local
????officials deciding it's time to revisit the idea of municipal utilities.,
????Carrie Peyton Bee Staff Writer

A year later, energy crisis shows no signs of cooling off
By Ed Mendel
San Diego Union Tribune
April 30, 2001

SACRAMENTO -- The first anniversary of the California energy crisis is coming
up next month, and as the Queen of England once remarked when the royal
family seemed to deregulate, it's been an "annus horribilis."

The horrible year for California began last May when electricity prices
suddenly began to soar, triggering a debate about the cause of the mysterious
price increase that is likely to continue for years.

It started when a three-day heat wave, from May 21 to May 24, set records in
some areas of the state and drove up the demand for electricity as
Californians sought relief with air conditioning.

More record heat June 14 in the San Francisco Bay Area strained the
overloaded system of Pacific Gas & Electric and resulted in rolling
blackouts, the planned temporary power outages that some fear may be routine
this summer.

The average price of electricity on the now-defunct Power Exchange soared to
$120 per megawatt hour in June, five times higher than the same month the
previous year, and remained roughly at that level until skyrocketing to $377
in December.

San Diego sounded the statewide alarm last summer as San Diego Gas &
Electric, the first utility to be deregulated, passed along much of the
higher cost of electricity to its customers, until legislation rolled back
and capped the utility's rates in September.

The executive director of a San Diego consumers group, the Utility Consumers'
Action Network, thinks the generators and the marketers of power, using
sophisticated computer methods, learned something as the heat wave drove up
the demand for power.

"It was the first time the generators had an opportunity to see how high the
price could go," said UCAN'S Michael Shames. "It was their primer. It was
Gouge 101."

State Sen. Steve Peace, D-El Cajon, who chaired a two-house committee that
completed the deregulation plan in 1996, had seen routine monitoring data
suggesting that the power market was being manipulated to drive up prices.

Peace took the unusual step last June of personally urging the adoption of a
much lower price cap by the board of the agency that makes last-minute power
purchases to maintain the grid, the Independent System Operator.

But the motion failed by a single vote. The consumer representative who cast
the decisive vote against the lower cap resigned afterward with a blast at
Peace, complaining of heavy-handed pressure.

Peace is unapologetic. He believes that stronger action by the ISO last June
would have sent a signal that might have discouraged market manipulation.

"It's just like the Federal Reserve mis-timing an interest-rate move," Peace
said.

The former ISO chairman, who represents generators, cited an ISO report
attributing the price increase last May to the heat wave, power plant
outages, less hydroelectric power and higher prices for the natural gas used
by power plants.

"I think all of those things showing up at the same time resulted in
significantly higher prices," said Jan Smutny-Jones of the Independent Energy
Producers.

Why power prices remained at high levels and even soared last winter, instead
of dropping as usual, is more difficult to explain.

The ISO contended last month that generators overcharged by more than $6
billion from last May through February. But federal regulators, who have
their critics, have found only $125 million in overcharges, making it an
"annus marvelous" for generators.

Ed Mendel is Capitol bureau chief for the Union-Tribune.

Copyright 2001 Union-Tribune Publishing Co.
The Daily News of Los Angeles
April 27, 2001 Friday, Valley Edition
SECTION: NEWS; Pg. N9
LENGTH: 275 words
HEADLINE: PROPOSED LAW PUTS BOUNTY ON ENERGY MANIPULATORS
BYLINE: Staff And Wire Services

BODY:

??California stepped up its war on the power industry Thursday as state
legislators offered to pay millions of dollars to "bounty hunters" who provide
information leading to the arrest and conviction of energy executives and
others
who manipulate the electricity market.

???California "is being plundered by an energy cartel," said Lt. Gov. Cruz
Bustamente, who is promoting a bill that would level criminal penalties for
exploiting energy markets. ?"If what they are doing isn't illegal, it ought to
be."

???Bustamente was one of a crowd of state leaders who went before microphones.

???On the floor of the Assembly, Speaker Bob Hertzberg, D-Van Nuys, rallied
his
Democratic colleagues behind a bill to create a state power authority with
equally blistering attacks on private power suppliers.

???But after Thursday's hearing before a Senate committee formed to
investigate
alleged price-fixing in the energy market, committee chairman Joe Dunn,
D-Garden
Grove, told a reporter: "I've never seen this much smoke when there wasn't a
fire."

???Power generators insist they are operating fairly and say there is no
evidence of them acting outside the law.

???Jan Smutny-Jones, executive director of the Independent Energy Producers
Association, dismissed the harsh rhetoric as unproductive. "Putting people in
prison isn't going to encourage more generation," Smutny-Jones said, warning
that the political posturing would make energy generators think twice about
investing in California.

???Also on Thursday, experts said federally ordered caps on wholesale
electricity prices won't necessarily mean California will escape rolling
blackouts this summer.

Copyright 2001 San Jose Mercury News
San Jose Mercury News
April 27, 2001, Friday

KR-ACC-NO: SJ-ELECTRIC-SUIT

LENGTH: 245 words

HEADLINE: Santa Clara County, Calif., Joins Lawsuit against Electric Suppliers

BYLINE: By John Woolfolk

BODY:

??Santa Clara County agreed Thursday to join a lawsuit against power
suppliers,
alleging they conspired to raise prices and boost profits while subjecting
consumers to higher bills and rolling blackouts.

??The county is the first to join the suit originally filed by San Francisco
in
January. ?The suit seeks refunds for consumers of more than $ 1 billion in
alleged excess electricity profits.

??"The San Francisco suit contains significant allegations of manipulation and
collusion by the wholesalers, resulting in the disastrous consequences we're
all
familiar with," said lead deputy county counsel Alan Tieger. "We looked at the
evidence on which those allegations were grounded and found they were indeed
supported by the evidence, expert and otherwise."

??The suit names a dozen electricity generating and marketing companies,
including Duke Energy and Enron Energy Marketing.

??Similar claims have been filed by three water districts in the San Diego
area, and two class-action lawsuits by private attorneys on behalf of
consumers
are pending against power suppliers.

??The companies have vigorously denied the charges.

??"I don't think there will be any evidence of illegal activity by anyone,"
said Jan Smutny-Jones, executive director of the Independent Energy Producers
Association, when asked about various government probes.

??-----

??To see more of the San Jose Mercury News, or to subscribe to the newspaper,
go to http://www.sjmercury.com

FERC Considers Imposing a Fee on Electricity Sales in California  ????
Updated: Monday, April 30, 2001 12:40 AM?ET ?????
?
Such a surcharge, at least in the short run, would fall hardest on the state
of California, which since January has spent more than $5 billion buying
power because the utilities have been unable to meet their obligations. For
now, the idea is nothing more than a proposal that occupies one paragraph
buried in a 39-page order issued Thursday concerning changes to California's
flawed deregulated electricity market. The commission is seeking public
comment on the surcharge proposal for 30 days. After that, it will decide
whether to implement it.

The fee was proposed by Commission Chairman Curt Hebert, a Mississippi
Republican, as a way "to stabilize the market," he said Friday, "since part
of the problem in California has to do with nonpayment of bills by the
utilities." But the provision also has the potential to funnel billions of
dollars to energy suppliers at a time when those payments are the subject of
intense negotiation.

One of the utilities, PG&E Corp.'s Pacific Gas & Electric Co. (PCG, news,
msgs), filed for protection from creditors under U.S. bankruptcy law on April
6, hoping to settle its claims with power suppliers for something less than
face value. Representatives of Pacific Gas & Electric and Edison
International's (EIX, news, msgs) Southern California Edison declined to
comment on the FERC proposal Friday.

The surcharge idea faces stiff opposition from some state officials, one of
whom said it amounts to an "unwarranted intrusion" into state jurisdiction.
Loretta Lynch, president of the California Public Utilities Commission, said
imposition of a surcharge would put pressure on wholesale-power costs that
already are too high. Bulk power cost $7 billion in California in 1999 and
topped $27 billion last year as prices careened out of control. Ms. Lynch
said she opposes the surcharge provision and the entire order given Thursday,
but that it will be up to the full commission to decide how -- or whether --
to file a challenge at FERC.

A spokesman for Gov. Gray Davis said "the governor would be strongly opposed
to any attempt to siphon money away from the state" and expects to lodge an
objection.

Los Angeles Times

?????????????????????April 30, 2001, Monday, Home Edition

SECTION: Part A; Part 1; Page 3; Metro Desk

LENGTH: 792 words

HEADLINE: CAPITOL JOURNAL;

CALIFORNIA AND THE WEST;

How Sales Tax Is Falling Through a Loophole

BYLINE: GEORGE SKELTON

DATELINE: SACRAMENTO

BODY:

??Dot-coms are in distress and laying off. Silicon Valley is a home buyer's
bazaar. The Nasdaq is nauseous. So is this any time to be siccing the tax
collector on Internet retailers?

??You bet. Coddling these techie traders with tax favors doesn't seem to be
helping them much anyway. So why not treat e-tailers like everyone else, like
brick-and-mortar merchants? Treat everybody evenhandedly.

??That's the view of Assemblywoman Carole Migden (D-San Francisco), assertive
chair of the Assembly Appropriations Committee. For the second straight year,
Migden is pushing a bill she says will close a loophole that benefits some
Internet retailers. She insists it's about fairly enforcing existing law, not
about a new Web tax, as critics claim.

??Present law requires Internet e-tailers to collect the sales tax if they
have
a physical presence in California, such as a traditional brick-and-mortar
store.
But some big outfits have created separate out-of-state subsidiaries to handle
their Internet orders. Same goods, same ads--with a large tax loophole because
the subsidiary ostensibly does not have a physical presence in California.

??Never mind that an unsatisfied customer of bookseller Barnes & Noble
dot-com,
for example, can return the Internet purchase to the local Barnes & Noble
store.

??Many e-tailers with dual "bricks-and-clicks" operations do collect the sales
tax from Internet customers. Migden cites Macy's, Wal-Mart, REI,
Hewlett-Packard
and Eddie Bauer. Others refuse, she says: Barnes & Noble, Borders Books, KB
Toys, Gateway Computers, Radio Shack.

??Her bill simply "clarifies" that the sales tax applies when the e-tailer is
affiliated with a California business, sells identical products, and they
market
jointly.

??"Right now," Migden contends, "certain big businesses blatantly violate the
tax law and put hard-working, honest small business people at a disadvantage."

??*

??Gov. Gray Davis is miffed at Migden, she hears. He vetoed her bill last
year,
declaring "it would send the wrong signal about California's international
role
as the incubator of the dot-com community." Internet marketing "must be given
time to mature," he maintained.

??Now Migden's at it again. "The governor's exercised. He thinks I'm jamming
him," she says. "But I'm moving the bill. He can veto it if he wants. I'm
putting it on his desk."

??It already has cleared the Assembly tax committee and will shoot out of her
panel Wednesday, headed for the Assembly floor. Last year, Democrats backed
the
bill. Republicans opposed it, siding with the Democratic governor.

??Davis fears some future opponent will claim he signed a bill to tax the
Internet. Migden is frustrated by that Internet tax tag, calling it "a lazy
misinterpretation."

??"I'm not picking on e-commerce," she protests. "I'm picking on the
multinationals who are arrogantly evading the law in complicity with the state
Board of Equalization."

??That would be, in particular, Republican board member Dean Andal of
Stockton.
"It's the usual liberal nut case bill," Andal says. "Just a bill chasing no
problem."

??*

??The BOE administers the sales tax. And Andal does agree that if an Internet
purchase can be returned to a store, the e-tailer legally must collect the
tax.
"We've been looking into that," he says.

??The board shouldn't have to look far. Barnes & Noble tells e-customers right
on its Web site that "you can return purchases to ANY Barnes & Noble store for
in-store credit."

??But other than that, Andal contends, a company has a constitutional right to
create an out-of-state subsidiary to avoid taxes.

??And, he notes, we're talking about relative pennies: $ 17 million annually,
the BOE estimates, compared to $ 39 billion in total California sales tax
collections. That lost revenue would cover only about seven hours worth of
electricity the state now is buying for utilities.

??But e-tailing is bound to grow. Tax avoidance could become significant,
benefiting dot-coms while discriminating against small retailers and the poor
who cannot afford Internet access.

??Migden will be in a strong position to change sales tax policy if she wins
her race next year for the five-member BOE. She's the early front-runner.

??Her concern--her reverence--is for the local booksellers, the mom-and-pop
merchants, the neighbor shopkeepers who can be smothered by the big tax
evaders.
"The little guy with the books stacked in the back," she says, "sweeping the
sidewalk, putting on extra locks, obeying the law and collecting taxes--trying
to make a go."

??Davis wants to be seen as a futuristic, New Age pol, worthy of campaign
donations from wealthy Web masters. But he can manage that without tromping on
his Democratic roots as protector of the little guy.

LOAD-DATE: April 30, 2001

?????????????????????????????13 of 103 DOCUMENTS

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

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

?????????????????????April 30, 2001, Monday, Home Edition

SECTION: Part A; Part 1; Page 3; Metro Desk

LENGTH: 1808 words

HEADLINE: CALIFORNIA AND THE WEST;

THE CALIFORNIA ENERGY CRISIS;

LIST OF PG&E CREDITORS SHOWS FIRM'S WIDE REACH IN BUSINESS;

BANKRUPTCY: IT INCLUDES SMALL AND BIG COMPANIES, GOVERNMENT AGENCIES AND
FORMER
EMPLOYEES.

BYLINE: TIM REITERMAN, TIMES STAFF WRITER

DATELINE: SAN FRANCISCO

BODY:

??It reads like a phone book: Able Auto Body, Able Building Maintenance, Able
Fence Co., Able Printing, Able Termite & Pest Control. . . .

??These companies are among about 50,000 entries on Pacific Gas & Electric
Co.'s roster of creditors recently filed in U.S. Bankruptcy Court.

??Another company, A&J Electrical Cable Corp. of Hayward, has supplied PG&E
with utility cables since 1980. But now the unpaid bills are hitting the $
100,000 mark--and that is a big deal to a relatively small business.

??"Who would ever think that PG&E would be in bankruptcy?" said owner
Magdalene
Reilly. "This is something affecting people. I've got a lot of paychecks on
Friday.

??"We have orders for the rest of the year from PG&E ," she added. "It is a
question: Do you decide to ship? . . . We probably will. They are a good
customer."

??When PG&E filed for Chapter 11 protection from creditors April 6, businesses
from California to Canada were caught by surprise. The names of the 20 biggest
creditors, some with billion-dollar claims, were filed with the court. The
utility also submitted a list of potential creditors--more than 3,500 pages
worth.

??The roster speaks to the remarkable economic clout and reach of a company
that prospered for almost a century before plunging into the third-biggest
bankruptcy case in U.S. history. It provides a glimpse into the relationships
between a giant utility--the state's largest--and businesses of all sorts and
sizes. And it underscores the high stakes as a bankruptcy judge reorders
PG&E's
financial affairs and decides in the coming months, if not years, who should
be
paid and how much.

??The case, said U.S. bankruptcy trustee Linda Ekstrom Stanley, "has a ripple
effect. . . . Creditors are affected, and they can't pay their bills either."

??There are small companies and conglomerates that sold power to PG&E.

??There are financial institutions from Wall Street to San Francisco's
Montgomery Street that lent money or provided services.

??There are government agencies at all levels, even the California Public
Utilities Commission.

??There are some retired PG&E employees and officers, including at least one
of
the company's former chief executive officers.

??But there also are vendors that have provided goods and services to PG&E for
years: tree trimming around power lines, bodywork for the utility's truck
fleet,
fencing for its vast land holdings, calibration of meters, fans to cool
electrical transformers, printing of brochures, signs for office doors, flight
suits for aviators who patrol power lines, limousine service for traveling
executives.

??No dollar amounts are attached to names on the master list. But records and
interviews with dozens of creditors show that the sums owed range from
hundreds
of millions of dollars to very little--or nothing at all. Many of the smaller
creditors were unaware they were on the roster until contacted by The Times.

??PG&E used to buy pump filters from California Pump & Supply in Sacramento.

??"We just closed out their account because they owed us $ 29," said office
manager Lisa Giordano. "It's a hassle to get anyone over there. I just wrote
it
off."

??The utility bought $ 38 worth of plants from Forest Nursery in Los Osos,
west
of San Luis Obispo. "It's nothing to go to court about, especially since they
paid it," said bookkeeper Lori Parsons.

??A wine wholesaler, an ice cream company and a coastal hotel are listed. So
is
Sing A Long Productions in Burlingame, which supples disc jockeys and karaoke.

??"I am sure we have done business with PG&E and other companies that have
parties from time to time," said owner Nick Foster. "Maybe somebody forgot
that
we did not get paid."

??PG&E spokesman Ron Low said the list includes everyone to whom the utility
wrote a check in the last two years, such as homeowners who received energy
conservation rebates and retirees who received checks related to benefits.

??"It was an attempt to notify anybody who possibly could have a claim against
the company and to cast the widest net possible," he said.

??Several PG&E retirees, such as Robert W. Oliver of Berkeley, were baffled by
their inclusion on the list. "I draw a little pension," said Oliver, who was a
personnel executive and left the company in 1980. "It's a vested pension."

??Another retiree on the list is former Chief Executive Richard A. Clarke.

??He and about 10 other former high-ranking PG&E executives or their survivors
have retained an attorney to help ensure that their retirement benefits are
protected during the bankruptcy case.

??"We don't want someone to get the idea that this is a bunch of well-heeled
executives trying to get a piece of the action," said the attorney, John T.
Hansen. "Some in our group are widows of former executives who depend on the
pensions they receive as survivors."

??Hansen said some retired executives have deferred-compensation packages that
might be considered a general unsecured bankruptcy claim.

??One concern, he said, is that PG&E Chairman Robert D. Glynn Jr. wrote
recently in a San Francisco Chronicle op-ed article that health care plans and
other benefits "for employees and most retirees" will continue.

??"We would want to know what 'most' is," Hansen said. "We want to sort it
out."

??Low of PG&E said fewer than 100 retired employees, most former officers,
"have a portion of their pension that is unsecured." That means their claims
will be handled in Bankruptcy Court with those of other unsecured creditors
whose debts are not backed by utility assets.

??The spokesman emphasized that ex-employees could be on the list because they
received a check from the company for something.

??Companies and individuals on the list, PG&E said, will be contacted and
given
an opportunity to state their claims, which the utility will file with the
court
May 11.

??Meanwhile, the effects of the bankruptcy filing continue to ripple beyond
the
utility.

??PG&E's action hit AA Safe & Lock Co. in Santa Cruz particularly hard. The
firm replaces keys and locks for PG&E offices and trucks.

??"We are a small business, and it is a big account," said owner Paul Bing,
who
declined to say what the utility owes. "We haven't been doing as much for them
since the whole crisis started."

??A Hayward firm that conducts environmental testing when PG&E remodels or
razes buildings is out money too. Ken Byk, president of Forensic Analytical,
would not provide a figure but said: "I am obviously concerned. . . . They
are a
good customer, but any time you run into these problems, it's disappointing."

??California Steam Inc. of Sacramento services PG&E pressure washers and water
recyclers at its truck-cleaning facilities. "I have just a couple of invoices
out," said service manager Bruce Amlin. The debt, he said, is less than $ 500.

??A similar amount is owed to California Turbo Inc. in Ontario. Sales manager
Cam Young said the utility has not paid for eight fans used to cool
electrical
transformers. "We're a small business," Young said, adding with a laugh: "We
might have to eat peanut butter and jelly for four or five months."

??Within days of the bankruptcy filing, PG&E sent about 12,000 creditors
letters that began: "Valued Goods and Services Provider: . . . Unfortunately,
the bankruptcy code precludes payment for goods and services received prior to
the date of filing. Payments on this pre-petition debt will be settled as part
of the plan of reorganization." The company assured vendors that they will be
paid for any future purchases.

??Some are not only forgiving, they are outspokenly loyal to PG&E.

??The relationship between the utility and AG Signs of Stockton spans two
decades. When Tony Guebara was starting his company, PG&E gave him business.
"They try to help the little guy," he said. "Just about everybody in town is a
vendor. They have people here who paint their trucks."

??AG Signs now has five employees and supplies PG&E with door lettering for
trucks, name plaques for office doors and signs and flags for construction
sites.

??Guebara said the utility's debt does not worry him: "PG&E has treated me
real
well. If I lose a couple of bucks because of this adversity, that is OK. . .
. I
don't think we've seen the last of PG&E."

??Many businesses and individuals said they had no idea why the company
believes it owes them money.

??Being included on the creditors list left the Vallejo Camp Fire Girls & Boys
and other charitable organizations somewhat confused. Officials of one
Berkeley
church could only speculate that it was listed because PG&E stock was
bequeathed
to the congregation decades ago.

??Twylah Lemargie, manager of the Cancer Aid Thrift Shop in Grass Valley, said
the utility is not even a customer. "PG&E did come in and replaced lots of our
ceiling lights with the long tubes," she said. "But it was done free as an
energy saver."

??A number of vendors said PG&E's account is paid up.

??The utility rented temporary housing units for workers on a hydroelectric
project about two years ago, but California RV Rentals in Rio Lindo is still
named as a creditor. "They don't owe me money," said Sandra Weaver, the
manager.
"If they want to give me some, it's OK."

??Many creditors are health clubs and health care providers: medical and
dental
offices, foot and joint specialists, pharmacies, chiropractors.

??When informed that the Castro Valley Chamber of Commerce was on the
creditors
list, the woman who answered the phone laughed uproariously. Then Executive
Director Bonnie Dettmer came to the line.

??"I'm going to guess it's membership dues," she said. "They are a member and
they have been very supportive. I would bet they belong to every chamber of
commerce."

??One creditor is the state agency that PG&E says drove the company into
insolvency by not allowing full recovery of its wholesale power costs.

??"They owe us $ 5.9 million . . . for environmental impact reports on PG&E
projects," said Paul Clanon, director of the Public Utilities Commission's
energy division. "It's a serious amount of money but currently is not having
an
impact."

??Top 10 Creditors

??The creditors owed the most money by Pacific Gas & Electric Co., according
to
the company's Chapter 11 filing:

???Creditor ???????????????????????????????????Money owed

???Bank of New York ????????????????????????$2.20 billion

???California Power Exchange ???????????????$1.96 billion

???Bankers Trust Co. ???????????????????????$1.30 billion

???California Independent System Operator ??$1.12 billion

???Bank of America* ?????????????????????????$938 million

???US Bank ??????????????????????????????????$310 million

???Calpine Gilroy Cogeneration LP ????????????$58 million

???Calpine Greenleaf Inc. ????????????????????$49 million

???Crocket Cogen ?????????????????????????????$48 million

???Calpine King City Cogen LLC ???????????????$45 million

??* Heading a group of banks

??Source: U.S. Bankruptcy Court, Northern DIstrict of California

GRAPHIC: GRAPHIC: Top 10 Creditors, Los Angeles Times PHOTO: Magdalene Reilly,
owner of A&J Electrical Cable Corp. of Hayward, says her company has supplied
Pacific Gas & Electric with utility cables since 1980, and that their unpaid
bills are now hitting the $100,000 mark. ?PHOTOGRAPHER: ROBERT DURELL / Los
Angeles Times PHOTO: "They try to help the little guy," says Tony Guebara,
owner
of AG Signs in Stockton, of PG&E. He has been doing business with utility for
two decades. ?PHOTOGRAPHER: ROBERT DURELL / Los Angeles Times

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

?????????????????????April 30, 2001, Monday, Home Edition

SECTION: Part A; Part 1; Page 3; Metro Desk

LENGTH: 1228 words

HEADLINE: CALIFORNIA AND THE WEST;

THE CALIFORNIA ENERGY CRISIS;

POWER WOES COMPLICATE DISCUSSIONS ON BUDGET;

FUNDING: GOV. DAVIS' PLAN FOR NEXT YEAR FACES DEMANDS FOR BILLIONS AS A
RESERVE
AND TO CUSHION ELECTRICITY RATE HIKES.

BYLINE: DAN MORAIN, TIMES STAFF WRITER

DATELINE: SACRAMENTO

BODY:

??Jockeying over the state's next spending plan, a tradition that usually
takes
place in the summer, already is turning intense as the energy crisis casts a
pall over what otherwise might have been relatively painless budget squabbles.

??A key state senator, worried about the slowing economy, is looking for
places
to pare as much as $ 4 billion from Gov. Gray Davis' proposed $ 104.7-billion
budget. And Republicans are beginning to demand that the state spend billions
in
general tax money to cushion electricity rate hikes of up to 40% being imposed
on consumers and businesses.

??Davis won't sign the budget for the 2001-02 fiscal year into law until late
June at the earliest. But with California mired in the energy crisis and the
economy slowing, the new budget is shaping up to be especially vexing.

??California's largest utility and a major private employer, Pacific Gas &
Electric, is in bankruptcy. The state has spent $ 5.2 billion in general tax
money to buy electricity, with no end in sight. Even before summer
temperatures
hit, Sacramento shelled out $ 90 million to buy electricity in a single day
last
week.

??And the Wall Street rating firm Standard & Poor's, unsure that the state
will
be reimbursed for the power purchases, lowered California's credit rating two
notches for the first time since the recession of the 1990s.

??Brightening an otherwise cloudy situation, income tax payments are meeting
or
exceeding predictions. More than $ 8 billion in checks from April income tax
returns have flooded into the Franchise Tax Board, said Department of Finance
economist Ted Gibson. On one day last week, the state's haul was $ 3.6
billion,
a record.

??"Receipts are very much on track, I'm relieved to tell you," Gibson said.

??But even as budget writers were exhaling, the payments merely offered proof
that the economy was strong last year, back when then-President Bill Clinton
was
heralding the longest period of economic growth in U.S. history, and
Californians' lexicon did not include the term "rolling blackout."

??State income and sales tax receipts softened in the first few months of
2001,
an indication that people will be earning less this year--and paying less in
taxes next year.

??Seeing trouble ahead, Senate Budget Committee Chairman Steve Peace (D-El
Cajon) wants to boost the state's emergency reserve, which was $ 1.9 billion
in
January. To do that, Peace last week called on budget committee members to
come
up with a list of cuts totaling $ 2 billion to $ 4 billion.

??Without a larger reserve heading into 2002, Peace said, the slowing economy
could force the state to make deep cuts or raise taxes next year, at a time
when
most legislators and Davis will be running for reelection.

??"The thing to be worried about is not the current year, but the trend line,"
Peace said.

??He adds a caveat for the spending plan that by law must be in place by July
1: There will be cuts if legislators fail to approve legislation that state
Treasurer Phil Angelides says he needs to obtain short-term loans and market
long-term bonds to finance electricity purchases.

??Davis and Angelides are preparing the largest bond sale--a way that
government borrows money--in U.S. history, as much as $ 12.4 billion. The
state
would use the proceeds to ease the shock to utility customers of record high
electricity prices this year. The bond debt would be paid off over a period of
perhaps 15 years.

??Given the size and complexity of the bond issue, many legislators say
Angelides may not be able to sell it for months.

??Davis, however, has an immediate need for money. The governor must release a
revised state budget within weeks. So, he is pushing for legislators to
approve
legislation that would allow Angelides to obtain a short-term loan of as much
as
$ 6 billion.

??At least some of the proceeds of the long-term bonds would be used to pay
off
the short-term loan--sort of like using one credit card to pay the balance on
a
second piece of plastic.

??Republican legislators are balking at the idea.

??Back in December, before the state entered the power buying business, GOP
legislators had called for $ 3.2 billion in tax cuts. With the energy crisis
complicating the financial situation, some Republicans are contending that
Davis
should use as much as $ 5 billion from the budget surplus to soften the impact
of electricity rate hikes.

??"That will be a de facto tax cut," said Senate Republican leader Jim Brulte
of Rancho Cucamonga. "Our Democratic friends want to do the bridge financing
so
they can increase the size of government."

??Republicans are in the minority. But they have a significant voice, because
state law requires that both houses of the Legislature approve spending
decisions by a two-thirds vote.

??The state Constitution says the budget must be in place by the July 1 start
of the new fiscal year. Davis signed his first two budgets on time. Given this
year's uncertainties, however, some legislators are thinking twice about
making
July vacation plans.

??The sudden turnaround may come as a shock to many legislators and lobbyists
who seek slices of the state budget pie.

??In recent years, legislators have grown used to the multibillion-dollar
windfalls of tax payments, which allowed them to deliver new swimming pools,
school programs, museums, parks, social and health care spending, and tax cuts
to their constituents. Indeed, the budget in Davis' first two years grew 37%,
even as the Democratic governor and legislators cut taxes by $ 3.9 billion.

??In a Legislature populated by term-limited newcomers, only a handful of
current legislators were in the Capitol in the early 1990s, when the worst
recession to hit California since the Great Depression caused the state budget
to actually shrink. Then-Gov. Pete Wilson and the Legislature reacted to a $
14-billion budget gap by raising taxes by more than $ 5 billion and slashing
spending.

??"It is not going to be the pie-in-the-sky budget some of us thought it would
be last year and even as late as January," said Sen. Jack O'Connell (D-San
Luis
Obispo).

??Veterans of the annual summer rite say there is no template for the coming
budget fights. Jean Ross of the California Budget Project, a private budget
watchdog and advocacy group, said Davis and legislators not only must pay
attention to the economy.

??They also must take into account many unknowns: Will the judge overseeing
PG&E's bankruptcy proceeding seek to raise rates further? Will federal energy
regulators be able to effectively limit wholesale electricity costs? What will
the economic impact be of summer blackouts?

??"It's a lot more complex and unpredictable than other years," Ross said.

??Legislators say they are lowering their sights. But letters from state
senators requesting money for their favored projects fill five large red
binders. "You wouldn't know there is a money shortage based on requests in
appropriations," said Assembly Appropriations Committee Chairwoman Carole
Migden
(D-San Francisco), preparing for what she calls her "hatchet role" of blocking
bills that require spending.

??For his part, Davis has not decided to significantly cut back on his
proposals, ranging from a sales tax "holiday" timed for back-to-school
shopping
to plans to clean sewage from beaches. He won't reveal those decisions until
he
releases his revised spending plan.

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

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

?????????????????????April 30, 2001, Monday, Home Edition

SECTION: Metro; Part B; Page 7; Op Ed Desk

LENGTH: 839 words

HEADLINE: COMMENTARY;

WILL THE FERC SEE THE LIGHT ON THE LAW?

BYLINE: FRANK A. WOLAK, Frank A. Wolak, an economics professor at Stanford
University, is, chairman of the Market Surveillance Committee of the
California,
Independent System Operator

BODY:

??Out-of-state firms selling into the California wholesale electricity market
at exorbitant prices have been blamed for the current electricity crisis. They
are, claim many observers, exercising their market power to raise wholesale
electricity prices.

??Although it is not illegal under California or U.S. antitrust law for a firm
to exercise its market power, it is illegal to do so under the Federal Power
Act. The Federal Energy Regulatory Commission, or FERC, which regulates the
California wholesale electricity market, is the entity charged with enforcing
this law. Its refusal to take sufficient actions that would result in "just
and
reasonable" wholesale electricity rates is the fundamental cause of
California's
current energy crisis. It is highly unlikely that anything it has done in the
last week has changed things at all.

??In 1935, Congress passed the Federal Power Act and required the Federal
Power
Commission (the predecessor to FERC) to set "just and reasonable" wholesale
electricity prices. Just and reasonable prices are those that recover
production
costs, including a "fair" rate of return on the capital invested by the firm.
Moreover, if the FERC finds that wholesale electricity prices are unjust and
unreasonable, the Federal Power Act gives it wide-ranging discretion to take
actions that result in just and reasonable prices. The FERC can also order
refunds for any payments by consumers in excess of just and reasonable prices.

??Almost 10 years ago, the FERC began to allow generators to receive market
prices instead of prices set through a cost-of-service regulatory process.
However, there is no guarantee that market prices meet the just and reasonable
standard required by the Federal Power Act. Markets often set prices
substantially in excess of the production costs for significant periods of
time.
This occurs because one or more firms operating in the market have what
economists call market power--the ability of a firm to raise market prices and
profit from it.

??However, if no firm possesses market power, the market price should be very
close to a price that only recovers production costs. In such a circumstance,
the price set by the market satisfies the just and reasonable standard of the
Federal Power Act.

??Before it allows any market participant to receive a market price rather
than
a cost-based price set through a regulatory process, the FERC requires each
participant to demonstrate that it does not have market power. In other words,
each market participant must submit sworn testimony to the FERC demonstrating
it
does not have the ability to raise market prices and profit from this
behavior.

??Each of the out-of-state generators made these filings before they began
selling into the California market, which started in April 1998. Each firm had
its authority to receive market prices approved by the FERC for a three-year
period that ends before this summer for several of the firms. It is virtually
impossible to determine on a prospective basis whether a firm possesses market
power. Moreover, the methodology used by the FERC to make this determination
uses analytical techniques that have long been acknowledged by the economics
profession as grossly inadequate. The events of the past 10 months have
demonstrated that contrary to their filings stating otherwise, all of the
out-of-state generators possess significant market power.

??A number of independent studies have shown that the market power exercised
by
these firms has resulted in unjust and unreasonable rates from May 2000, until
now. Moreover, in its Dec. 15, 2000 report on the California electricity
market,
the FERC concluded that wholesale electricity prices during the summer and
autumn of 2000 were unjust and unreasonable and reflected the exercise of
significant market power.

??Despite its own conclusion, the FERC thus far has refused to set just and
reasonable prices for wholesale electricity in California. Instead, the FERC
implemented market rule changes that have enhanced the ability of these firms
to
set excessive wholesale electricity prices. In addition, it has refused to
order
refunds for any overpayment during the summer and autumn of 2000 for the
prices
that it deemed unjust and unreasonable.

??Fortunately for California consumers, the California Public Utilities
Commission and Gov. Gray Davis refused to be accomplices in the FERC's
decision
not to enforce the Federal Power Act. They refused to pass on to California
consumers prices that the FERC itself had determined were unjust and
unreasonable.

??Because these out-of-state firms must apply for renewal of their
market-based
pricing authority before this summer, the FERC has one more opportunity to set
just and reasonable prices for wholesale electricity in California. It has
before it several proposals that would enforce all provisions of the Federal
Power Act. The health of the California and national economies would be
severely
undermined if the FERC continues to ignore its legal obligations.

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

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

?????????????????April 30, 2001, Monday, Late Edition - Final

SECTION: Section A; Page 1; Column 5; Business/Financial Desk

LENGTH: 1444 words

HEADLINE: While a Utility May Be Failing, Its Owner Is Not

BYLINE: ?By By RICHARD A. OPPEL Jr. and LAURA M. HOLSON

BODY:

??Pacific Gas and Electric, the giant California utility, may have just made
one of the largest bankruptcy filings in history, but it has been a banner
year
for the rest of its parent company, the PG& E Corporation.

??In Bethesda, Md., far from the energy crisis in California, another PG& E
subsidiary, National Energy Group, earned $162 million last year and ranked as
the nation's third-largest power trader. Compensation for the unit's
executives
soared. Many investors now believe that the subsidiary, just a decade in the
making, is by itself worth more than its 96-year-old utility sibling.

???How did National Energy get so big so fast? By using cash, partly generated
by its sister utility, to buy unregulated power plants in the Northeast,
expand
trading-floor operations and sell power across the country. The exact numbers
are in dispute, but much of Nationals Energy's profits last year came from
California.

??Most other large utilities have done the same thing over the past decade,
building national or even global power companies from roots in local
monopolies.
But nowhere is the success of these unregulated businesses more of an issue
than
in California, where PG& E's investments may be challenged in bankruptcy
court.

??Still, such transfers of assets were fundamental to deregulation plans in
two
dozen states, and they were encouraged by federal rules designed to build a
new
wholesale marketplace in electricity.

??And today, the offspring of the nation's utilities dominate that market,
after industry leader Enron. ?Eight of the nation's 10 largest power marketers
are affiliates or spinoffs of regulated utilities, controlling about 42
percent
of power trading.

??It is largely these unregulated power producers and traders whose sales of
power in California have prompted accusations by state leaders of price
gouging,
and demands for the price caps that federal regulators took their first,
halting
steps toward embracing last week.

??The profitability of the utilities' unregulated operations is becoming clear
as companies report earnings for the first three months of the year.

??For example, Reliant Energy reported that operating income at its
unregulated
wholesale energy business soared to $216 million in the first quarter, or 16
percent more than at its regulated utility, which serves Houston. This week,
Reliant expects to spin off its unregulated businesses through an initial
public
stock offering that would put a market value on the new company of as much as
$8.8 billion -- more than the rest of Reliant.

??A number of other major utility companies have spinoffs or trading and
generation units that now earn nearly as much as, or more than, their core
utility operations. These include Duke Energy in Charlotte, N.C.; Sempra
Energy
of San Diego; the Southern Company in Atlanta; the Constellation Energy Group
in
Baltimore; and Utilicorp United in Kansas City, Mo.

??In some places, the growth of the unregulated businesses continues to raise
questions of fairness -- particularly where utilities have been permitted to
transfer plants to the new units at deep discounts to their market value.
Critics say that ratepayers, whose bills paid for the plants' construction,
should benefit more when the plants are sold.

??In Florida, a commission on energy deregulation formed by Gov. Jeb Bush has
proposed permitting such transfers on the grounds that they are needed to
create
a new wholesale marketplace. Opponents, including the Florida Municipal
Electric
Association, which represents utilities owned by local governments, say the
plan
would produce a $9 billion windfall that should go to ratepayers.

??In California, some creditors of Pacific Gas and Electric have signaled that
they will want the bankruptcy court in San Francisco to review parent PG& E's
efforts to keep its unregulated businesses out of creditors' reach.

??And the California Public Utilities Commission is investigating whether PG&
E
and Edison International, whose Southern California Edison utility unit is
also
near insolvency, have improperly transferred cash to their parents and to
unregulated sister companies.

??A recent audit ordered by the commission showed that Pacific Gas and
Electric
transferred $4.1 billion to PG& E from 1997 to 1999. Most of that went to
dividends and stock repurchases, but $838 million was invested in other
subsidiaries, primarily its National Energy Group unit. Southern California
Edison transferred $4.8 billion to its parent company between 1996 and
November
2000, a separate audit showed; Edison International invested $2.5 billion in
its
unregulated Mission Group subsidiaries during the same period.

??Executives of the companies say the transfers were proper. Audits have shown
that "we followed the rules and didn't do anything wrong," said PG& E's chief
executive, Robert Glynn. "We did not ask consumers in California to support
any
of the losses that occurred in those businesses when we started them up," he
said. Now, forcing the unregulated units to support their ailing sister
utility,
he said, "would be no different than calling up shareholders and saying, 'The
California electric bills are pretty high; send some money in so we can give
it
back to them.' "

??Loretta Lynch, the president of the utilities commission, took a different
view. "Should we look backward," she asked, "and say, 'Hey, wait a minute --
that corporate structure profited by all of our power payments to them in the
past, and they should participate in helping us through to get to a solution
in
the future?' "

??The cornerstone deal of PG& E's unregulated energy business was struck four
years ago, when it acquired the hydroelectric and fossil-fueled generation
plants of New England Electric System for $1.6 billion. PG& E is now one of
the
largest generators in the Northeast, operating plants that can light up to
five
million average-sized homes.

??While California officials say Pacific Gas and Electric's woes have been
caused, at least in part, by market manipulation by out-of-state generators,
the
Justice Department has been investigating possible market abuses involving
PG& E
and two other companies in New England. Mr. Glynn said that PG& E had done
nothing wrong and that the company has responded to Justice Department
requests
for information.

??Overall, PG& E's National Energy Group has 30 power plants in 10 states, and
others under development or construction that include one in Athens, N.Y.,
that
is expected to begin supplying electricity to New York City in 2003. It also
operates an energy trading operation in Bethesda and controls a natural gas
pipeline into Northern California.

??To Wall Street, the utility companies' investments in unregulated businesses
were a necessary survival tactic, as investors demanded faster-growing
profits.

??"The stock market was going like gangbusters, and the utilities' returns of
11 percent weren't cutting it," said Richard Cortright, a utility analyst at
Standard and Poor's, the bond rating agency.

??Moreover, as deregulation loomed, industry executives saw no choice but to
make new investments. "It looked like the utility opportunity was going to
start
shrinking," Mr. Glynn said.

??Consumer groups question whether utilities would have invested more in
improving basic service if they had not had the option of putting money
elsewhere.

??Mike Florio, a lawyer with The Utility Reform Network, a consumer group in
San Francisco, cited findings last year by state regulators that from 1987 to
1995, Pacific Gas & Electric spent nearly $550 million less on maintaining
electric and gas facilities than had been factored into its rates. Separately,
in 1999, the utility agreed to pay about $29 million to settle charges that
consumers were endangered because it failed to trim trees near high-voltage
power lines.

??"Several hundred million dollars didn't get spent for maintenance, and that
ultimately falls to the bottom line as profit," Mr. Florio said.

??Mr. Glynn said the utility had always spent appropriate sums on maintenance,
coming within one-half of one percent of the amount built into rates over a
20-year period.

??In the big picture, he said, it was hard to see how PG& E had been a winner
in deregulation, even before its utility's humiliating bankruptcy. "If you
look
at what happened, the net of it was a loss," Mr. Glynn said, "because the
value
leaked out on the regulated utility side faster than we were able to build it
on
the nonregulated side."

About This Report

??This article is part of a joint reporting effort with the PBS series
"Frontline," which will broadcast a documentary about California's energy
crisis
on June 5.

??http://www.nytimes.com

GRAPHIC: Charts: "The Biggest Power Marketers"
Most of the biggest unregulated power marketers and traders are owned by the
the
country's biggest electric utilities or have been spun off by them. Here are
the
top 10, based on 2000 sales.

Companies owned or spun off from utilities: Enron Power and affliliates
MEGAWATTS SOLD IN 2000 (IN MILLIONS): 590.2
MARKET SHARE: 13.03%
CHANGE FROM 1999: + 97%

Companies owned or spun off from utilities: American Electric Power Service
MEGAWATTS SOLD IN 2000 (IN MILLIONS): 401.3
MARKET SHARE: 8.86
CHANGE FROM 1999: +84

Companies owned or spun off from utilities: PG&E Energy and affiliates
MEGAWATTS SOLD IN 2000 (IN MILLIONS): 282.6
MARKET SHARE: 6.24
CHANGE FROM 1999: +62

Companies owned or spun off from utilities: Duke Energy and affiliates
MEGAWATTS SOLD IN 2000 (IN MILLIONS): 276.2
MARKET SHARE: 6.10
CHANGE FROM 1999: +226

Companies owned or spun off from utilities: Reliant Energy and affiliates
MEGAWATTS SOLD IN 2000 (IN MILLIONS): 204.3
MARKET SHARE: 4.51
CHANGE FROM 1999: +166

Companies owned or spun off from utilities: Mirant Americas Energy and
affiliates
MEGAWATTS SOLD IN 2000 (IN MILLIONS): 202.6
MARKET SHARE: 4.47
CHANGE FROM 1999: +23

Companies owned or spun off from utilities: Aquila Energy Marketing
MEGAWATTS SOLD IN 2000 (IN MILLIONS): 186.7
MARKET SHARE: 4.12
CHANGE FROM 1999: +4

Companies owned or spun off from utilities: Cinergy operating companies
MEGAWATTS SOLD IN 2000 (IN MILLIONS): 166.4
MARKET SHARE: 3.67
CHANGE FROM 1999: +246

Companies owned or spun off from utilities: Constellation Power Source
MEGAWATTS SOLD IN 2000 (IN MILLIONS): 162.3
MARKET SHARE: 3.58
CHANGE FROM 1999: +222

Companies owned or spun off from utilities: Williams Energy and affiliates
MEGAWATTS SOLD IN 2000 (IN MILLIONS): 138.4
MARKET SHARE: 3.05
CHANGE FROM 1999: +127

(Source: Platt Power Markets Week)(pg. A17)

"Outdoing Their Parents"
Taking advantage of deregulation, many of the country's biggest power
utilities
have set up unregulated subsidiaries to trade and produce power. These
subsidiaries have become extremely profitable, often outperforming their
regulated corporate siblings.

UTILITY: Duke Energy
OPERATING INCOME (MILLIONS)
1Q '00: +$465
1Q '01: +460
UNREGULATED BUSINESS: North American Wholesale Energy
OPERATING INCOME (MILLIONS)
1Q '00: +82
1Q '01: +348
RELATIONSHIP OF UNREGULATED BUSINESS TO UTILITY
North American Wholesale Energy is a subsidiary of Duke Energy.

UTILITY: Reliant Energy
OPERATING INCOME (MILLIONS)
1Q '00: +$202
1Q '01: +186
UNREGULATED BUSINESS: Wholesale Energy
OPERATING INCOME (MILLIONS)
1Q '00: -22
1Q '01: +216
RELATIONSHIP OF UNREGULATED BUSINESS TO UTILITY
Reliant Energy plans to sell 18 percent of Reliant Resources -- mostly
Wholesale
Energy -- this week.

UTILITY: Southern
OPERATING INCOME (MILLIONS)
1Q '00: +$439
1Q '01: +483
UNREGULATED BUSINESS: Mirant
OPERATING INCOME (MILLIONS)
1Q '00: +169
1Q '01: +279
RELATIONSHIP OF UNREGULATED BUSINESS TO UTILITY
Southern completed the spinoff of Mirant on April 2.

(Source: S.E.C. filings)(pg. A17)

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

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

????????????????????APRIL 30, 2001, MONDAY, FINAL EDITION

SECTION: NEWS; Pg. A3

LENGTH: 1108 words

HEADLINE: NEWSMAKER PROFILE;

Nettie Hoge;

Taking on power;

Consumer advocate revels in uphill battle

SOURCE: Chronicle Staff Writer

BYLINE: Chuck Squatriglia

BODY:
Given a choice, Nettie Hoge would rather be out in her garden right about now,
digging in the dirt.

???Instead, the head of The Utility Reform Network is digging into
California's
energy mess, making sure the average Joe doesn't take it in the kisser as
lawmakers, regulators and utility brass hats try to keep the lights on and
utilities afloat.

???It's grueling work, full of long hours that leave precious little time for
the gardening Hoge so adores. Not that she's complaining. Hoge, 50, honestly
loves her job and insists she wouldn't do anything else.

???"I've got a mutant gene," she said with a laugh as she relaxed, for just a
moment, in a spartan office littered with messy piles of paperwork. "I've
always
wanted to do this."

???TURN has been keeping tabs on companies like Pacific Gas and Electric Co.
and Pacific Bell for more than 25 years. Hoge and her crew lobby the Public
Utilities Commission, counsel lawmakers, analyze reports and file the
occasional
lawsuit. They are, in short, professional gadflies who represent the public
in a
system that some say favors big business.

???"The biggest protector of the consumer, by far, has been TURN," said Bob
Gnaizda, public policy director for the Greenlining Institute in San
Francisco.
"(Hoge) has made TURN into the leading consumer utility advocate in the
nation."

???It's not glamorous work, nor is it particularly lucrative. Hoge, a lawyer
by
training, took a pay cut when she accepted the $75,000-a-year job in 1995.
And,
truth be told, most folks have no idea Hoge is in their corner.

???"There are other rewards," she said. "You don't get the adoration of Joe
Citizen standing up and yelling, 'Yay TURN!' But there's an excitement about
being involved in the discussions where the big decisions are made."

???The youngest of four children, Hoge bounced around the middle of the
country
as she grew up, following her career Army officer father from Kansas to
Oklahoma
to Texas.

???"All the places where you can shoot big guns," she joked.

???Hoge graduated from high school in Pullman, Wash. After a stint at the
University of Southern California, she graduated Phi Beta Kappa from
Washington
State University and earned a law degree from the University of San Francisco.

???Hoge's entire career has been spent protecting the underdog. During a
two-year stint as a law school graduate at Brobeck, Phleger & Harrison in San
Francisco, "I got into trouble for doing too much pro bono work," Hoge
recalled.
"The partners would come around each month to check our billable hours. Mine
were always zero."

???Since taking the helm almost six years ago, Hoge has led TURN to some
impressive consumer victories. They include persuading the Public Utilities
Commission to create a $352 million fund to underwrite rural telephone service
and bringing an end to ratepayer subsidies of PG&E's Diablo Canyon nuclear
power
plant in 2002.

???Hoge, a stickler for detail, has a reputation for giving exhaustive answers
to even mundane questions.

???"Everybody agrees she knows what she's talking about," said Harvey
Rosenfield, president of the Foundation for Taxpayer and Consumer Rights. "In
many respects, TURN is the intellectual force in this debate. Those of us who
are deeply involved in this issue rely upon Nettie to lay out the facts for
us."

???Hoge is surprised people think her wonkish, but admits she is circumspect.

???"My big fear is being marginalized and having people think we (at TURN)
don't know what we're talking about," she said. "Maybe I overcompensate."

???Few doubt Hoge's smarts, but she has plenty of critics among the utilities,
lawmakers and lobbyists she has crossed swords with over the years. However,
none of them will say anything publicly.

???"We have no comment on her," said Shawn Cooper, a spokesman for Pacific Gas
and Electric Corp., the parent company of the foundering utility.

???It was the same story with Southern California Edison and many of the
legislators who have criticized Hoge and TURN in recent years.

???Hoge isn't surprised her adversaries are keeping mum.

???"There's nothing for them to gain by saying anything negative about us
because the public is on our side," she said.

???Still, TURN has drawn criticism from Carl Wood, generally considered the
most ardent consumer advocate on the PUC.

???"Frankly, I would have expected myself to be on the same page with (TURN)
more than I actually am," Wood said. "I'm not sure they wholeheartedly believe
in regulation, and I think it comes from a distrust of regulators. But maybe
I'm
taking it personally."

???Wood chastised TURN for supporting utility divestiture of generating plants
as California's deregulation effort got under way. And he said Hoge places too
much emphasis on the utilities' role in the energy mess instead of focusing on
the profiteering of power generators.

???"The utilities have some culpability, but they are not the main driver
behind the crisis," Wood said. "TURN's interventions do not reflect that
reality."

???Still, he gave TURN high marks and credited Hoge with making it a far more
effective advocate.

???Hoge admits she has had her hands full with the energy crisis, saying she
and her staff "are trying to keep our health and sanity."

???Asked if she would have joined TURN if she had known how crazy California's
energy market would become and how hard she would have to work, Hoge was
characteristically wary.

???"I don't think anyone would want to sign up for this," she said after a
moment's pause. "On the one hand, it's very serious, very rewarding work. But
on
the other hand, sometimes you're just beating your head against the wall."

???Still, Hoge doesn't plan to give up the fight anytime soon.

???"But at some point I'd like to retreat and spend some time contemplating
the
forest for the trees."

???Or the garden for the plants.

??-----------------------------------------------

??Nettie Hoge -- Age: 50.

???-- Residence: Oakland.

???-- Job: Executive director, The Utility Reform Network, October 1995 to
present. The utility and telecommunications industry watchdog group in San
Francisco represents consumers before the Public Utilities Commission, the
Legislature and elsewhere.

???-- Education: Bachelor's degree in communications, Phi Beta Kappa, from
Washington State University, 1976. Law degree, cum laude, from University of
San
Francisco, 1985.

???-- Background: Most of Hoge's 25-year career has been spent protecting the
little guy, first as a social worker and later as an attorney with Consumers
Union and the California Department of Insurance under Insurance Commissioner
John Garamendi.E-mail Chuck Squatriglia at csquatriglia@sfchronicle.com.

GRAPHIC: PHOTO, (1) Nettie Hoge is respected for her encyclopedic knowledge of
regulatory issues., (2) Nettie Hoge has headed The Utility Reform Network for
six years. "I've always wanted to do this," she says. / John O'Hara/The
Chronicle

LOAD-DATE: April 30, 2001

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??????????????????????Copyright 2001 The Washington Post

?????????????????????????????The Washington Post

????????????????????April 30, 2001, Monday, Final Edition

SECTION: A SECTION; Pg. A03

LENGTH: 1669 words

HEADLINE: Energy Forecast for Summer: No Blackouts but Price Spikes; Grid
Managers Promote Conservation, Await New Plants

BYLINE: William Claiborne, Washington Post Staff Writer

DATELINE: CHICAGO

BODY:

??The rest of the United States is virtually certain to escape rolling
blackouts this summer like the ones that have plagued California, but record
price hikes for electricity are likely in many places, energy experts agree.

???Despite their confidence that they can survive everything but an extremely
hot summer without power outages, managers of the nation's interconnecting
electrical power grids are anxiously awaiting new power plants that are
scheduled to come on-line. They are also promoting more frugal consumption by
power customers and seeking ways to avoid distribution logjams during peak
demand periods this summer.

???"We see a big distinction between California and the rest of the country,"
said David Costello, an economist in charge of short-term forecasting for the
Energy Information Administration, the statistical arm of the Department of
Energy. "We have no real reason to believe anyplace is unusually at risk."

???But record spikes in the price of electricity are a given for this summer,
some industry analysts say, because a growing proportion of power plants now
run
on natural gas, which has doubled in price over the past year.

???The DOE estimates that electricity demand will grow 2.3 percent nationally
this year, with much higher increases in the West and the South. At the same
time, the reserve capacity margin that utilities try to build into their
systems
to handle the hottest days -- when use of air conditioners and other
appliances
taxes supplies -- has been falling in some regions to well less than the
desired
15 percent above peak summer loads.

???That means utilities may have to import large volumes of electricity over
transmission systems that were not designed to handle them. What power
officials
are hoping to avoid are critical shortfalls in generating capacity in some
regions, followed by overwhelming strains on aging high-voltage transmission
lines as power is bought and sold across the country in increasingly
competitive
electricity markets.

???Even though scores of new power plants have been built in the Northeast,
South and Midwest in recent months and many more are on the drawing boards,
the
expected 15 percent increase in new generation will not be fully on-line for
another two years. That leaves parts of the nation vulnerable to outages if
there are prolonged heat waves this summer, or if utilities are unable to
start
up new or rebuilt gas-fired power plants as scheduled, according to energy
experts.

???Despite all those potential problems, there is no reason to believe that
California's power nightmares will spread to the rest of the country,
officials
said.

???This year, utilities have announced they are adding 40 to 50 gigawatts of
new generating capacity to gas-fired plants across the nation, compared with
only 22 gigawatts that were added last year, Costello said. He said that even
if
half of those announced plants never materialize, this year's new capacity is
certain to be as great or greater than last year's, meaning that the predicted
increased consumption can probably be met. A gigawatt is 1,000 megawatts, or
enough to power about 1 million homes.

???"We don't know that [transmission] infrastructure has really been fixed,
but
my sense is they're in better shape overall as far as capacity is concerned,"
Costello said.

???The nation's 203,600-mile high-voltage network has undergone relatively few
changes in 50 years, during which deregulation has prompted electricity
wholesalers to sell power at even greater distances to reach more lucrative
markets, adding to the pressure on the grid system.

???California, in a sense, has been serving as a stalking horse for other
states, some of which also deregulated their electricity systems and are
consciously avoiding doing anything that resembles the California model.

???Eugene Gorzelnik, spokesman for the North American Electric Reliability
Council (NERC), which oversees the interlocking power grids, said: "Obviously,
there will be problems in California and there's nothing that's going on that
will solve those problems. But a lot of [utilities] people are looking at
California and saying to themselves, 'Can I do this in a way they didn't?'
That's a positive development."

???Apart from California, the worst problems are expected in adjoining western
states, as Golden State electrical grid managers scramble to buy electricity
at
a time when power production at the region's hydroelectric dams is already
being
cut because of shrinking water levels in reservoirs.

???The Northwest Power Planning Council recently reported that the demand for
electricity has grown 24 percent in the past decade while new generation has
grown only 4 percent.

???NERC is not expected to issue its long-awaited pre-summer electricity
reliability assessment -- a document that forecasts peak generation and
consumption -- until next month. But in interviews, officials of many of the
10
regional reliability councils that comprise the national grid system appeared
fairly sanguine about the prospect of avoiding widespread brownouts this
summer.

???"Assuming normal weather and assuming our generating units come off
maintenance on schedule, we don't anticipate any particular problems meeting
our
loads," said Bill Reinke, executive director of the Southeastern Electricity
Reliability Council.

???Reinke said the region was adding 300 miles of new transmission lines, has
5,600 megawatts of new generating capacity -- enough to power 5.6 million
homes
-- and is seeking to identify potential transmission bottlenecks so it can
take
preemptive corrective measures against distribution failures.

???Outside the West, the greatest potential for blackouts may be in New York,
where the near certainty of transmission logjams in an antiquated
infrastructure
prompted Consolidated Edison Co. to request approval for 11 combustion turbine
mini-generators in case of a power shortage. Residents and conservationists
are
appealing court approval of the generators on environmental grounds.

???Stephen Allen, spokesman for the Northeast Power Coordinating Council said,
"If the 400 megawatts the generators provide go on-line, it'll still be tight,
but New York should be okay." He said Upstate New York should have surplus
electricity to sell to New York City, although some experts say transmission
bottlenecks could make it difficult for New York City to import power on
abnormally hot days.

???New York City customers, who have already had their electricity rates
increased 40 percent in the last two years, could see prices rise an
additional
50 percent because of the deregulated power industry's dependence on gas-fired
generation, according to some analysts.

???Allen said that since last June, New England has added mostly gas-fired
plants that generate more than 1,000 megawatts and should have an additional
2,000 megawatts on-line before the end of the summer. He said the region
should
have a 15 percent to 18 percent capacity margin.

???The Mid-Atlantic Area Council, made up of Maryland, Virginia, the District
of Columbia, Delaware, New Jersey and Pennsylvania, is expecting a reserve
margin of more than 16 percent and an increase of 2,100 megawatts in
generating
capacity over last year, to about 60,000 megawatts, according to the council's
president, Phillip G. Harris. Harris said the council met last year's peak of
49,288 megawatts with no problems, though the summer of 2000 was relatively
cool.

???Harris cited several reasons "why we are not like California," including a
decision to centralize all planning, which California did not; the creation
of a
regional market instead of a state-based marketplace like California's, and a
policy of only slow, incremental changes in the grid.

???"A single misstep can have huge consequences," Harris said. "We're
tinkering
with something that has worked for 100 years, so you better do it right."

???In the Midwest, utilities expect a peak demand this summer of 55,221
megawatts, compared with 52,214 megawatts last summer, according to Richard
Bulley, executive director of the six-state Mid-America Interconnected
Network.
But keeping pace with the nearly 6 percent increase in demand is the addition
of
5,470 megawatts of capacity, Bulley said.

???"We do not anticipate any major limitations on the region's bulk
transmission system, and we project a healthy reserve margin of more than 18
percent," he said.

???Since 1998, 33 companies have proposed projects in Illinois totaling 25,000
megawatts of gas-fired power. Although no one expects all of that to come
on-line, the state's total generating capacity is just under 34,000 megawatts,
meaning that even if only a modest amount of the anticipated power was added,
the region would have a cushion, even in a hot summer.

???Officials of Commonwealth Edison Co., the biggest utility in Illinois, say
that new or rebuilt electrical distribution facilities should prevent a repeat
of the kind of disastrous power outages that crippled offices in Chicago's
Loop
last summer, when lines broke and transformers burst into flames.

???Few power grids are in as good shape as Texas's. The state anticipates a 23
percent power margin this summer and the addition of 9,188 megawatts of new
generating capacity this year, according to Heather Tindall, spokeswoman for
the
Electric Reliability Council of Texas (ERCOT). Texas utilities have 27 new
power
plants under construction and 31 more in the planning stages, she said.

???As a result, ERCOT is forecasting almost 70,000 megawatts of generating
capacity this summer, compared with a peak demand of 57,600 megawatts on one
111-degree day last summer.

???Tindall said that after studying California's system, the Texas grid made a
"concerted effort" to operate theirs differently. For example, she said, Texas
supports utilities entering into long-term contracts for power, while in
California, power companies did not enter into such contracts and were forced
to
pay exorbitant prices at peak times.

LOAD-DATE: April 30, 2001

?????????????????????????????21 of 103 DOCUMENTS

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

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

???????????????????????April 30, 2001, Monday, BC cycle

?????????????????????????????9:49 AM Eastern Time

SECTION: State and Regional

LENGTH: 594 words

HEADLINE: Developments in California's energy crisis

BYLINE: By The Associated Press

BODY:

??Developments in California's energy crisis:

??MONDAY:

??- Members of the Assembly Subcommittee on Natural Gas Costs and Availability
unveil legislation to cut natural gas prices.

??- The state remains free of power alerts as electricity reserves stay above
7
percent.

??FRIDAY:

??-Gov. Gray Davis calls a federal regulatory order "a Trojan horse" that will
profit power generators at California ratepayers' expense. The Federal Energy
Regulatory Commission is considering requiring the state's electric grid
operator to add a surcharge on power sales to pay generators the money they
are
owed by the state's two large financially strapped utilities.

??- State power buyers have asked for another $500 million to buy electricity
for the customers of three cash-strapped utilities. That brings the total
amount
authorized for power purchases to $6.2 billion since mid-January, when the
state
began purchases power for Pacific Gas and Electric Co., Southern California
Edison and San Diego Gas and Electric.

??- Gov. Gray Davis says state office buildings cut energy use by an average
of
20 percent in January and February, saving taxpayers $286,000 in utility
bills.

??- State officials negotiating long-term power contracts for customers of
three cash-strapped utilities have secured five more contracts. Four of the
contracts signed in March by the Department of Water Resources will provide
466
megawatts of electricity during times of peak demand this summer, according to
DWR documents. One megawatt is roughly enough power for 750 homes.

??- California Public Utilities Commission attorneys are advising state
agencies to avoid submitting monetary claims against Pacific Gas and Electric
Co. despite the company's bankruptcy. The PUC is trying to retain their
electric
rate-setting authority over the utility and says submitting claims could bring
the state under the court's jurisdiction as a creditor, which could allow the
judge to set electric rates.

??- Shares of Edison International closed at $9.90, up 15 cents. PG&E Corp.
closed at $8.94, up 20 cents.

??-The state remains free of power alerts as reserves stay above 7 percent.

??WHAT'S NEXT:

??- Davis' representatives continue negotiating with Sempra, the parent
company
of San Diego Gas and Electric Co., to buy the utility's transmission lines.
Davis says he expects to have an agreement within two weeks.

??THE PROBLEM:

??High demand, high wholesale energy costs, transmission glitches and a tight
supply worsened by scarce hydroelectric power in the Northwest and maintenance
at aging California power plants are all factors in California's electricity
crisis.

??Edison and PG&E say they've lost nearly $14 billion since June to high
wholesale prices the state's electricity deregulation law bars them from
passing
on to consumers. PG&E, saying it hasn't received the help it needs from
regulators or state lawmakers, filed for federal bankruptcy protection April
6.

??Electricity and natural gas suppliers, scared off by the two companies' poor
credit ratings, are refusing to sell to them, leading the state in January to
start buying power for the utilities' nearly 9 million residential and
business
customers. The state is also buying power for a third investor-owned utility,
San Diego Gas & Electric, which is in better financial shape than much larger
Edison and PG&E but also struggling with high wholesale power costs.

??The Public Utilities Commission has raised rates as much as 46 percent to
help finance the state's multibillion-dollar power buys.

LOAD-DATE: April 30, 2001

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???????????????????????Copyright 2001 Associated Press

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

????????????????????????????April 29, 2001; Sunday

SECTION: Domestic, non-Washington, general news item

LENGTH: 1313 words

HEADLINE: ?Geothermal Plants Need More Steam

BYLINE: JENNIFER COLEMAN

DATELINE: MIDDLETOWN, Calif.

BODY:

???Geothermal plants in The Geysers area north of the Napa Valley have tapped
steam fields to produce electricity since the 1960s. The 350-degree steam
rushes
more than 1,500 feet up from the earth, spinning turbines that create a
constant
flow of electricity.

??But mismanagement of the steam fields beneath the hilly northwestern
California region that straddles the Sonoma and Lake county lines has led to a
large decline of pressure and a drop of more than 50 percent in the amount of
power the plants produce.

??The geothermal decline comes as California already faces short supplies of
hydroelectricity from the drought-ridden Pacific Northwest and growing
competition for megawatts from other power-starved states.

??State power grid managers estimate they're losing about 900 megawatts of
geothermal electricity due to the gradual depletion of the steam fields.
That's
enough power for roughly 675,000 homes.

??''They just overproduced. It is a renewable source of power, but it's
renewable over geologic time,'' says Katherine Potter, a spokeswoman for
Calpine
Energy, which owns 19 of the 21 geothermal power plants in The Geysers region,
which incidentally has no geysers.

??The first electricity produced by tapping into pockets of steam trapped in
the earth made its debut in 1904 in Larderello, Italy. That plant, rebuilt due
to World War II damage, is still operating. The first U.S. geothermal plant
was
a small operation at The Geysers built in 1962.

??Steam fields are created when water flows through fissures in the rock deep
in the earth and is heated by hot magma. Geothermal plants tap into that
pressure and use it to spin turbines. The plants' cooling towers release
plumes
of white steam, which can be seen for miles on a clear day.

??While The Geysers is a unique geologic formation called a dry steam field,
there is the potential for thousands of megawatts of geothermal power from
other
regions that could use the more common ''wet steam'' process, said Karl
Gawell,
executive director of the Geothermal Energy Association in Washington D.C.

??Wet steam plants tap into superheated water in the earth, separate the steam
and use it to power generators. The water and the condensed steam is pumped
back
into the earth.

??CalEnergy Corp. owns 10 power plants in Imperial County that produce about
330 megawatts of power, enough for about 247,500 homes. Those plants and
others
like them haven't seen a decline in pressure like Calpine's plants.

??Geothermal energy is second only to hydroelectricity as a continuous, cheap
source of power, said Jan Stewart, Calpine's public relations manager.

??The plants in The Geysers reached their peak power production in the 1980s,
producing about 2,000 megawatts of electricity enough to power about 1.5
million
homes.

??At that time, about 30 companies were involved in various geothermal
ventures
in the area and didn't work together, Stewart said.

??''The resource wasn't being managed properly. As a result, it was a very
fractured environment,'' she said. ''If one plant shut down, the steam would
be
vented to the atmosphere, instead of being rerouted to another plant where it
could be used.''

??In the 1960s and '70s when The Geysers got started, there was ''a real
wildcatter's mentality'' among power generators, said Rich Ferguson, energy
chairman for Sierra Club California.

??''Basically, they took out the water in the form of steam faster than Mother
Nature was putting it back in,'' he said.

??The available steam declined, and the area now puts out about 850 megawatts,
sufficient power for roughly 637,500 homes.

??Since then, geothermal engineers have learned more about managing the
resource, Ferguson said.

??The superheated, self-contained system at The Geysers has no

??ater running through it. ?''The Geysers is unique worldwide. There really
aren't other dry steam fields,'' Gawell said. ''In effect, there was never a
sustainable level of production, you always would have depleted it eventually.
It's like a giant pressure cooker. As soon as you put the first straw in, you
began to deplete the resource.''

??Calpine is experimenting with replenishing the steam fields by pumping
treated waste water back into the earth. It began three years ago, when Lake
County stopped pumping its treated waste water into Clear Lake.

??Now, more than 8 million gallons of treated waste water is returned daily to
the earth. The experiment appears to be working _ power output is up 68
megawatts.

??''People like the stewardship that Calpine provides now,'' Ferguson said. ''
Calpine has taken on as a long-term goal to make that sustainable.''

??Calpine is building a 50-mile pipeline to Santa Rosa and plans to pump
another 11 million of treated waste water daily from that city. The company
expects that will boost production another 85 megawatts.

??Even with the new project, power grid managers say they're planning for
diminishing geothermal electricity.

??''We've lost a considerable portion of their output due to the decline in
the
output of the steam,'' said Jim McIntosh, director of grid operations for the
Independent System Operator. ''All supplies are very important to us at this
point.''

??The plants are relatively low-maintenance once they're running _ only one
engineer staffs each of the 19 Calpine plants in The Geysers.

??But geothermal plants are more expensive to build than natural gas-fired
power plants, Gaywell said.

??''It's like choosing between two identical cars one is $10,000 and the other
is $30,000, but the $30,000 car comes with a lifetime supply of fuel,'' he
said.
''People are shortsighted on investments and it takes more money upfront to
build geothermal.''

??Most geothermal resources are on public land, lengthening the building
process because more permits are needed, Gawell said.

??Two new plants are in the application process in California.

??Researchers estimate there are 2,500 megawatts of untapped geothermal
resources in Nevada, Gawell said. Idaho, New Mexico and Oregon also have sites
that could be tapped, he said.

??''Many of these sites were looked at in the '80s, but then nothing happened
because in the '90s natural gas was too cheap to meter,'' he said.

??Ferguson said the state spent $540 million over the last four years on
incentives for renewable energy projects, including geothermal, solar, wind
and
biomass, and he expects the plan will be renewed when it expires in December.

??''We think there will be an equivalent amount of money,'' he said. ''All the
technologies have to compete against each other, but geothermal should do
pretty
good.''

??___

??There are three types of geothermal power plants. Here's a look at how they
work:

???Dry steam: Such plants are rare, producing steam and not hot water. The
Geysers region is the world's largest dry steam field. Steam from the earth is
piped to the power plant, where it spins turbines to create electricity. After
the remaining steam condenses back to liquid, it is returned to the earth.

???Wet steam: This type of geothermal plant is more common. There are several
such plants in Southern California. Hot water and steam are brought to the
surface, separated and the steam is used to power turbines. The water is
returned to the earth as is the condensed steam.

???Binary: These plants use hot water and steam from the earth to heat another
liquid, such as isobutane, which has a lower boiling point than water. That
liquid's steam is used to power turbines to make electricity. When the steam
cools and becomes liquid it's returned to the tank and reused. This type of
system is self-contained and has no emissions.

??___

??On the Net:

??Geothermal Education Office: http://geothermal.marin.org

??California ISO: http://www.caiso.com

??Calpine Corp.: http://www.calpine.com

?????(PROFILE

?????(CO:Calpine Corp; TS:CPN; IG:ELC;)

?????)

LOAD-DATE: April 29, 2001

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

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

???????????????????????April 29, 2001, Sunday, BC cycle

SECTION: State and Regional

LENGTH: 413 words

HEADLINE: Guns in schools, deregulation delay on lawmakers' agenda

BYLINE: By BRAD CAIN, Associated Press Writer

DATELINE: SALEM, Ore.

BODY:

??Backers of a bill to prevent holders of concealed handgun licenses from
bringing their weapons onto school property will spend the coming week trying
to
force a Senate vote on the issue.

??Also this week, House Speaker Mark Simmons is planning to schedule a hearing
on his bill to pull the plug - at least for now - on a key part of an electric
deregulation law that's due to take effect this fall for large businesses.

??The guns-in-schools bill has been on life support for weeks, with a key
Senate committee chairman refusing to schedule a hearing on the bill on
grounds
that it is overly contentious and wouldn't pass anyway.

??The sponsor of the bill, Sen. Ryan Deckert, D-Beaverton, and other
supporters
aren't giving up, however.

??They are hoping to use a parliamentary maneuver that would enable them to
move the school guns issue to the full Senate for debate by attaching it to
another education-related bill.

??Gun owner groups say SB508 is unnecessary because there have been no
documented cases of law-abiding carriers of concealed handguns causing any
problems at schools.

??But a key supporter of the bill, Sen. Ginny Burdick, D-Portland, says she is
convinced the measure would pass in both the House and Senate - if it can be
brought up for vote.

??"I don't think we should wait to have dead children before we ban guns in
schools," said Burdick, who was a chief sponsor of a measure passed by voters
last fall expanding background checks at gun shows.

??California's power woes that were precipitated by that state's move to
deregulation are giving Oregon lawmakers second thoughts about their decision
to
approve a phased-in deregulation of the electricity market in Oregon.

??A bill passed by the 1999 Legislature is supposed to open Oregon's electric
markets to industrial and large commercial customers, beginning this October.

??The 1999 law is supposed to free large businesses to buy power on the open
market, and does not deregulate electric rates for residential customers.

??Still, Simmons says that drought conditions and the power market turmoil
caused by California's energy crisis require reconsideration of the law.

??For that reason, the House speaker is planning hearings this week on his
proposal to enact a 15-month delay in Oregon's electricity restructuring
efforts.

??"This just gives the opportunity for the energy markets to settle for a
while," the Elgin Republican said.

??Similar legislation is pending in the Senate.

LOAD-DATE: April 30, 2001

?????????????????????????????25 of 103 DOCUMENTS

???????????????????????Copyright 2001 The Post Register

??????????????????????????Idaho Falls Post Register

????????????????????????????April 29, 2001 Sunday

SECTION: News; Pg. a1

LENGTH: 530 words

HEADLINE: Plenty of blame to go around for West's power woes

BYLINE: PAUL MENSER

BODY:

??When it comes to power, the West is a mess.

??Because of its botched deregulation attempts, California bears a lot of the
blame - but not all of it, said Susan F. Tierney, a former assistant secretary
in the Energy Department, now a consultant for Lexecon, a Cambridge, Mass.,
consulting firm.

??Like planets lining up to usher in an age of hysteria, a combination of
unforeseen circumstances have put the Northwest behind the eight ball. In
addition to California's self-created tangle, oil and natural gas prices are
rising and a drought is stymieing the region's hydropower production.

??The situation is less volatile in other parts of the country. In the
Northeast, South and Midwest, where growth has been modest and generating
capacity has been more stable, there's less discrepancy between supply and
demand.

??Undergirding the West's situation was some serious lack of foresight,
Tierney
said.

??When it looked like California power customers would be able to get
electricity from whoever offered it at the cheapest price, utilities worried
about recovering the money they'd spent building plants and transmission lines
in the '70s and early '80s. So they sold off their power plants and bought
power
on the wholesale market, where it was cheap and plentiful.

??Not trusting the marketplace, California legislators capped the rates
utilities could charge residential customers. When wholesale power prices went
up, they couldn't pass those increases on to consumers.

??"At the time, they did not realize that in a couple of years there would not
be an adequate power supply," Tierney said.

??California's economic explosion of the late '90s, coupled with a failure to
build any new plants, brought the crisis to a head. Computers are not by
themselves big energy consumers, but the factories that make them are. The
Internet, with all its server farms and data hotels, also became a heavy power
user.

??When demand in California finally caught up with supply, "all of a sudden,
utilities had to buy power, and it became a seller's market," Tierney said.

??But most of the Northwest's power comes from hydroelectric dams, and there
has to be water in the rivers to power the turbines at the dams. In a drought
year like this, the power has to come from somewhere else, most likely oil-
and
natural gas-fired plants, which fire up when demand is high.

??Because demand is so high this year, generators can charge exorbitant
prices,
knowing that California and the Northwest have nowhere else to buy power.

??Also, natural gas prices have gone through the roof in the last 18 months
and
aren't likely to come down until next year at the earliest. Until 18 months
ago,
the price of natural gas had been at a prolonged low, so companies weren't
interested in expensive drilling projects.

??The problem is not likely to be permanent. As exploration and extraction
pick
up, prices will come down. The public has already begun to hear a conservation
message, and the Federal Energy Regulatory Commission is being deluged with
applications for new power plant construction.

??Staff writer Paul Menser can be reached at 542-6752, or via e-mail at
pmenser@idahonews.com.

LOAD-DATE: April 29, 2001

?????????????????????????????26 of 103 DOCUMENTS

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

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

?????????????????????April 29, 2001, Sunday, Home Edition

SECTION: Opinion; Part M; Page 6; Opinion Desk

LENGTH: 1312 words

HEADLINE: THE STATE;

HOW KILOWATT SOCIALISM SAVED L.A. FROM THE ENERGY CRISIS

BYLINE: JEFF STANSBURY, Jeff Stansbury is a PhD candidate in American history
at
UCLA. His, dissertation is on the role of the labor movement in the building
of,
L.A.'s infrastructure

BODY:

??Why is Los Angeles an island of tranquillity in the electric-power crisis
that has rocked California and threatens to spread across the nation?

??News stories have repeatedly told us that the city's ownership and operation
of its own generating stations is the principal reason. By staying clear of
the
state's 1996 deregulation scheme for private utilities, the Department of
Water
and Power was able to hold onto its power plants.

??So far, so good. But when we ask how Los Angeles came to enjoy public power
in the first place, the answer commonly given makes a hash of history.

??Most historians and political scientists credit the city's progressive
reform
movement of 1890-1915 for having wisely settled on a municipal utility. True,
some of the entrepreneurs, lawyers and reform-minded professionals who called
themselves "the best men" during that era agitated for the city-built Owens
Valley aqueduct and its generating stations. But many reformers opposed the
city's effort to distribute its own power. Because they had allied themselves
with railway magnate Henry Huntington, who owned an electric company, or
because
they favored regulation over municipal ownership, they wanted L.A.'s three
private electric companies to sell and profit from aqueduct power. Meyer
Lissner, a reform attorney often portrayed as a champion of public power,
opposed the holding of a decisive 1911 citywide straw poll on the subject
because he knew most Angelenos would cast their ballots for municipal
ownership.
That, he said, would be "unfair" to the three utilities.

??The most steadfast partisans of public power were not progressive reformers
like Lissner but the city's much-maligned labor unions, and for a simple
reason.
While mistrust of oligopoly ran through nearly all sectors of society, it
burned
hottest in working-class wards. Without organized labor's dogged campaign for
"gas and water socialism," as well as its willingness to hand control of these
resources to the anti-union regimes of Mayors George Alexander and Henry Rose,
there would be no DWP today.

??Organized labor played a key role in the city's original decision to
municipalize its water distribution system. On Oct. 24, 1892, 700 union
members
met to demand that the city build a small neighborhood waterworks as a step
toward public control of the entire water supply. From that day on, L.A.'s
unions never wavered in their call for a public water supply publicly managed.
They mobilized the rank and file for the water-company buyouts of 1901-04,
and,
in 1906, the Public Ownership Party's citywide campaign primed voters to pour
$
23 million into construction of the Owens River aqueduct a year later. The
aqueduct was the sine qua non of public power. At a time when most progressive
reformers were mute on the subject, organized labor insisted that the aqueduct
be used to generate electricity for the city's streets, homes and businesses.

??A broad consensus backed the city's construction of hydroelectric plants
while the aqueduct was being built, but most of the city's politicians and
corporate lobbyists were committed to public subsidies, not public ownership,
of
aqueduct power. The 1911 straw poll, in which city voters declared their
support
for municipal ownership and distribution of Owens River power, upset their
plans.

??The most consistent fighters for public power during the decades after the
straw poll were the Central Labor Council, International Brotherhood of
Electrical Workers, other unions and city employees who stuffed campaign
envelopes, canvassed precincts and got out the vote. Voters who favored
municipally owned power and initiatives bolstering the DWP tended to be
working
class and Democratic; those opposed were mainly middle and upper class and
Republican.

??In this polarized political climate, Mayor Alexander called for a $
6.5-million bond issue to complete the aqueduct-power distribution network; he
left open the question of who would sell the power to consumers. Unions and
socialists tied their support for the bonds to a city charter reform that
would
guarantee them a long-sought role in city government through proportional
representation. When the reform failed at the polls, they withheld support
from
the power bonds, and these, too, went down to defeat in 1913. Much of the
rancor
workers felt was aimed at progressives like Lissner, head of the Good
Government
Organization, who fought labor's charter plank because it would bring
socialists
onto the City Council.

??The labor movement's dedication to public ownership soon reasserted itself,
however. With a citywide election coming up that June, five unionists seeking
council seats on the Socialist Party ticket revived labor's long-standing
demand
for city operation of all public utilities at cost. They urged the City
Council
to hold a new power-bond election with a clear public ownership mandate. They
attacked the power companies' efforts to buy aqueduct power from the city and
sell it to Angelenos at a profit. Soon, the great majority of unions in the
Central Labor Council were locked in what turned out to be a decisive struggle
against the power oligopoly made up of Southern California Edison, Pacific
Light
& Power and Los Angeles Gas & Electric.

??An unprecedented event brightened the bonds' chances. A machinist, Fred C.
Wheeler, won a seat on the City Council, the first unionist to do so in the
20th
century. Wheeler led a successful fight against an attempt to split the
power-bond issue into two separate ballot propositions, one to complete the
aqueduct's generating stations, the other to create a city-owned distribution
system. Such a division would probably have doomed public power.

??The large majority of unionists who favored public power had little time to
savor Wheeler's victory. While pressing the attack on the three electric
companies, they faced a small but angry split in their own ranks. Dissenters
in
the Building Trades Council and a few of its unions argued that labor's
grievances against the progressive regimes of 1909-14 had turned the argument
for municipal ownership on its head. What good was municipal ownership in the
hands of a council and mayor who had caused the arrest of hundreds of peaceful
picketers during the citywide strikes of 1910, had underpaid aqueduct workers
and fed them bad food and had denied unionists influential city jobs? The
final
blow was the council's rebuff of a petition signed by thousands of workers
for a
"living wage" law. Was it not folly to reward labor's foes with control of the
aqueduct's power?

??Union activists who favored the bonds conceded that the dissenters were
correct in their assessment of "progressive" city government. But the
progressive star was fading. What counted in the long run was whether Los
Angeles could wrest the city's electric power system from the grasp of private
utilities. The Central Labor Council's unions took this challenge to heart and
voted, 60-4, for a resolution favoring the bonds.

??On its own, as well as in coalition with other groups, the labor movement
marshaled its rank and file on behalf of public power. It turned out hundreds
of
poll-watchers and canvassers on election day. The pro-bond unions never did
win
over the dissenting faction; rather, they overwhelmed it at the polls. On May
8,
1914, L.A.'s voters emphatically endorsed the power bonds by a hefty 71%-29%,
with the city's working-class wards providing by far the largest margin of
victory.

??Within a year, Los Angeles sold its bonds and began buying out the three
investor-owned utilities. The first public power flowed into local homes and
businesses in 1916. Two decades later, the DWP eliminated the last of its
private competition and consolidated the working-class legacy of kilowatt and
water socialism that has served the city so well in the current energy crisis.

GRAPHIC: GRAPHIC-DRAWING: (no caption), JENNIFER HEWITSON / For The Times

LOAD-DATE: April 29, 2001

?????????????????????????????27 of 103 DOCUMENTS

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

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

?????????????????????April 29, 2001, Sunday, Home Edition

SECTION: Opinion; Part M; Page 4; Editorial Writers Desk

LENGTH: 558 words

HEADLINE: CONSERVATION SANDBAGS;

THE DAVIS ADMINISTRATION NEEDS TO LAUNCH A CRASH EDUCATION COURSE TO CONVINCE
CALIFORNIANS OF THE SERIOUSNESS OF THE ELECTRICITY CRISIS AND THE NEED FOR
FAR-REACHING ENERGY-SAVING MEASURES.

BODY:

??Natural disasters and crises can be devastating but are relatively simple
and
easy to grasp. A brush fire you fight with shovels. An earthquake, you clean
up
the rubble afterward and strengthen buildings in anticipation of the next. But
California's energy crisis is far different and more complex. It's a quiet
disaster on scattered, invisible fronts. Most people see it only when their
own
lights go out.

??There also is no precedent for this crisis in California and no accurate way
to forecast how bad it can get, either the blackouts or the financial
consequences. But as May approaches, it's certain that most Californians are
not
adequately informed about the severity of the problem or what they can do to
limit its impact.

??Gov. Gray Davis, the utilities and others need to engage in a crash
education
program that will convince Californians of the seriousness of the problem and
motivate them to undertake their own conservation programs in homes and
businesses. California has been a pioneer in power conservation, and its
citizens will listen to persuasive reasoning.

??As the chairwoman of the state Senate's Energy Committee, Sen. Debra Bowen
(D-Marina del Rey) deals with problems ranging from utility company insolvency
to rate "gaming" by energy producers. "But I'm really worried about this
summer," she said last week, referring to the potential for day after day of
rolling blackouts. She told of one businessman in her district who reported he
will lose an estimated $ 30,000 every time his power is cut. Why not at least
schedule blackouts so people can plan for them? she asked. Why not?

??In San Francisco, the Bay Area Economic Forum released a study indicating
that power woes could deliver a $ 17-billion blow to the state's economy in
lost
production, the cost of rate increases and increased product prices. That may
be
conservative. The study did not include the $ 5.1 billion the state has spent
so
far to buy power for the insolvent private utilities.

??Republicans in the Legislature are stalling bills that would float a $
10-billion revenue bond issue to finance power purchases and keep the state
fiscally above water. They have latched onto a powerful issue, Davis'
unwillingness to detail how he's spending the taxpayers' billions. Davis says
he
needs secrecy for competitive reasons as he bargains with power companies,
though he is letting out a slightly wider trickle of figures.

??Wall Street, already wary about the credit-worthiness of the state, thinks
poorly of the delay in issuing the bonds. Republicans should put a temporary
hold on their battle with Davis and get the measure to the governor's desk
this
week.

??Lawmakers were slow in passing an $ 850-million conservation program, Bowen
acknowledges. But Davis put the new program on a fast track Friday and made a
smart choice in S. David Freeman, former chief of the Los Angeles Department
of
Water and Power, to run the conservation effort.

??Freeman, 75, is a canny veteran of electric power politics. Davis may abhor
giving out bad news, but Freeman need not shrink from it. Freeman should be on
radio and television every day telling California just how bad the problem is
and what they can do about it. If this were a flood, we'd be stacking
sandbags.
Our sandbags are conservation programs. We need to start stacking them now.

LOAD-DATE: April 29, 2001

?????????????????????????????28 of 103 DOCUMENTS

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

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

?????????????????????April 29, 2001, Sunday, Home Edition

SECTION: Part A; Part 1; Page 27; National Desk

LENGTH: 1316 words

HEADLINE: BUSH: THE FIRST 100 DAYS;

BUSH IS OFF TO A ROCKY START IN HIS HANDLING OF ALL THINGS CALIFORNIAN;

POLITICS: BUT WHY WOO THE GOLDEN STATE WHEN HE CAN'T CARRY IT IN AN ELECTION
'NO MATTER HOW HARD HE TRIES,' ONE ANALYST POINTS OUT.

BYLINE: RICHARD SIMON, TIMES STAFF WRITER

DATELINE: WASHINGTON

BODY:

??So what if President Bush has opposed electricity price controls sought by
California officials? Or that he has proposed cutting aid to states for
incarcerating illegal immigrants convicted of crimes? Or that he has visited
26
states in his first 100 days in office--but not the most populous?

??Bush really does care about California, the White House insists, even if the
state preferred Al Gore on election day. Administration officials said they
have
done a lot and plan to do more to lessen the electricity turmoil expected this
summer.

??"I don't think he's treated California any differently than any other
state,"
said Rep. George P. Radanovich (R-Mariposa).

??Some Californians feel otherwise.

??"The Bush administration's treatment of California started at indifference,
moved to neglect and has now reached actual harm," complained Phil Schiliro,
chief of staff for Rep. Henry A. Waxman (D-Los Angeles).

??Sen. Dianne Feinstein (D-Calif.) has asked three times for a meeting with
Bush to discuss the energy crisis. Her response from the White House: a form
letter with her name misspelled.

??Bush has called for requiring public agencies to buy costly earthquake
insurance, a measure opposed by California lawmakers of both parties. He has
proposed cutting an earthquake preparedness program. And he provided no money
in
his proposed budget to clean up a pile of uranium processing waste in Utah
leaking into the Colorado River.

??"That's our water supply," political analyst Sherry Bebitch Jeffe said.
"What
kind of message is that?"

??John J. Pitney Jr., associate professor of government at Claremont McKenna
College, said Bush's apparent indifference makes political sense.

??"It's hard to argue that Bush should spend any political capital in
California," he said. "The 2000 election suggested that he cannot carry the
state no matter how hard he tries. The Republicans have already lost several
House seats and have probably hit rock bottom. . . . From a purely political
angle, there's little point in giving California any money or attention that
could otherwise go to more competitive states, such as Florida."

??But Jeffe, senior scholar at USC's School of Policy, Planning and
Development, said Bush's failure to visit the state is hurting GOP efforts to
rebuild itself in California. "We are ground zero for the kind of Latino
outreach that he said he wanted to do."

??And veteran California Republican political strategist Kenneth L. Khachigian
said Bush at least needs to prepare for the electricity problems predicted for
summer.

??"If you get three or four days of successive blackouts, air conditioners
going out, traffic lights going out, a second bankruptcy--whether he wants it
or
not--it's his problem," Khachigian said. "It would be wise for him to have a
proactive stance, not just reactive."

??Tough Act to Follow

??Some political analysts have suggested that if Bush becomes too involved in
California's troubles, what is now Democratic Gov. Gray Davis' problem could
become Bush's. But, Khachigian said, "there's a fine line between taking
responsibility for a problem and claiming that California isn't part of the
United States."

??In dealing with heavily Democratic California, Bush has made this much
clear:
He is no Bill Clinton.

??Bush has a hard act to follow. When Clinton was president, he visited
California often and rewarded it with federal largess. And California in
return
showered him with buckets of campaign dollars and electoral votes.

??But Rep. Ed Royce (R-Fullerton) said California will benefit from Bush's
presidency too. "As Californians bear a disproportionately higher tax burden,
they stand to benefit greatly from the president's tax relief plan."

??While House spokeswoman Claire Buchan assured that Bush will visit
California
soon. His wife already has done so.

??As proof that California is on their mind, administration officials point to
the three Californians in the Cabinet--Ann M. Veneman of Agriculture, Norman
Y.
Mineta of Transportation and Anthony J. Principi of Veterans Affairs--and
others
in top White House jobs.

??Bush also has appointed California Latinos to high-level posts: Huntington
Park Councilwoman Rosario Marin as treasurer, Los Angeles entrepreneur Hector
V.
Barreto Jr. as head of the Small Business Administration and former San Mateo
County Supervisor Ruben Barrales as deputy assistant for
intergovernmental affairs.

??Critics said that a Californian at the top does not guarantee that the
Cabinet departments will develop California-friendly policies. The proposed
Agriculture budget, for example, provides only $ 5 million--not the $ 15
million
that California lawmakers said they need--to fight the glassy winged
sharpshooter, an agricultural pest that threatens the state's wine industry.

??A spokesman for Veneman assured that additional funding will be considered,
if requested by California lawmakers. And Rep. Mike Thompson (D-St. Helena),
who
assailed Bush for missing opportunities to help California, nonetheless
expressed confidence in Veneman. "She's going to keep pounding away to make
sure
that the California wine industry gets what it needs."

??Some Good News

??Though he has proposed cuts in some programs that are important to
California, Bush has taken some actions that please state officials. He has
proposed a permanent research and development tax credit--an action that would
particularly benefit Silicon Valley.

??His proposed budget includes additional money to crack down on illegal
immigration and drug smuggling and unsafe trucks crossing into California from
Mexico. And he has proposed increased funding to reduce backlogs at
immigration
offices.

??In one area, Bush even bested Clinton. He proposed $ 14 million to clean
Lake
Tahoe, more than the $ 3 million recommended by Clinton last year.

??And although he has drawn flak for proposing cuts in programs to promote
energy efficiency and alternative fuels, his proposal to boost assistance to
low-income families for insulating their homes and reducing their utility
bills
would nearly double California's allocation, to $ 8 million next year.

??No Bush policy has been more criticized in California than his approach to
the state's energy woes--particularly his adamant opposition to price
controls.
Steve Maviglio, a spokesman for Davis, said Bush and his aides "got off to a
strong start" by extending federal orders sought by the state to keep power
flowing into California.

??"Since then . . . they've been AWOL," Maviglio said. In a reference to price
controls, he added: "They're skirting around the edges of the problem without
taking the bold action they need to take."

??"The feds are the only ones who can step in and bring some sanity to the
cost
of electricity in California," Thompson said.

??Administration officials said they have taken steps "from our first hours in
office" to address the energy crisis. They said they have responded favorably
to
all the state's requests except price controls, which Bush contends would
discourage the building of power plants.

??While some seek to portray Bush's opposition to price controls as
unsympathetic to California's plight, a number of California's House
Republicans
also oppose price controls. And even those who support them argue that the
issue
misses the larger point.

??Rep. Randy "Duke" Cunningham (R-San Diego), an advocate of price controls,
nevertheless said: "I agree with the administration that the state alone
remains
responsible for solving this crisis."

??Added Rep. Mary Bono (R-Palm Springs): "I don't believe Bush should bear the
brunt of responsibility that the Clinton administration left over."

??Tim Ransdell, executive director of the California Institute for Federal
Policy Research, doubted that Bush would ignore California. "California
represents one-eighth of the nation. One in eight Americans can't be ignored."

LOAD-DATE: April 29, 2001

?????????????????????????????29 of 103 DOCUMENTS

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

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

?????????????????????April 29, 2001, Sunday, Home Edition

SECTION: Business; Part C; Page 2; Financial Desk

LENGTH: 1290 words

HEADLINE: WEEK IN REVIEW;

TOP 10 STORIES / APRIL 23-27

BYLINE: Lisa Girion and Terril Yue Jones and Sallie Hofmeister and James Bates
and Peter Pae and Jeff Leeds and Nancy Rivera Brooks and Peter Gosselin

BODY:

??1. Economic Growth a Welcome Surprise: The U.S. economy grew at an
unexpectedly strong 2% annual rate in the first three months of the year,
thanks
largely to buoyant shopping by American consumers. The gross domestic
product--the country's total output of goods and services--expanded at twice
the
pace it did in the final three months of 2000 and at twice what analysts had
expected, the government said Friday. Although many analysts said the economy
remains balanced between strong growth and recession, economic optimists
exulted
over the report. Fed Chairman Alan Greenspan added to the celebratory mood by
saying that a key trend behind the economy's strong performance of the last
decade--its ability to improve productivity--is likely to resume despite the
current slowdown.

??(Peter Gosselin)

??*

??2. Stocks Rise on Good News: The GDP report boosted stock prices, which
already had gotten a lift from better-than-expected home sales figures earlier
in the week. The Dow Jones industrial average rose 117.70 to close at
10,810.05
on Friday, up 2.2% for the week, while the S&P 500 index climbed 18.53 to
1,253.05. The Nasdaq, which had fallen Thursday on concerns over weak
technology
profits, rose 40.80 to 2,075.68, finishing the week down 4.1%. Meanwhile, the
yield on the benchmark 10-year Treasury note rose to 5.33% from 5.19%.

??(Times Staff Writer)

??*

??3. Power Crisis Zaps State Bond Rating; Price Controls OKd: The mounting
cost
to the state general fund of buying electricity for California consumers
prompted Standard & Poor's Corp. to downgrade $ 25 billion of California's
general obligation bonds. S&P lowered California's bond rating by two notches,
to A-plus from AA. The move could add hundreds of millions of dollars to the
state's borrowing costs, bond experts said. Separately, federal regulators
approved a plan to control electricity prices in California during times of
supply shortages. The Federal Energy Regulatory Commission tied prices during
power emergencies to the cost of natural gas and emission controls, among
other
things, with the least efficient generator setting the market price. Critics
said the order contains loopholes that will allow market manipulation.

??(Nancy Rivera Brooks)

??*

??4. FTC Pans Music Industry Marketing: A much-anticipated sequel to last
year's Federal Trade Commission report on the marketing of violent
entertainment
to children slammed the record industry for failing to heed regulators'
recommendations. Though it gave some credit to the film and video-game
industries for revising the way they marketed to young audiences, the FTC
found
the five major record conglomerates continued to advertise "explicit-content"
albums on popular teen shows such as MTV's "Total Request Live" and BET's "Top
10 Live." Just before the release of the first report, the Recording Industry
Assn. of America had blunted some of the criticism by introducing a policy
against ads for such albums on TV shows or in publications whose audience is
mostly 16 years old or younger. But the RIAA said it rescinded the policy in
September.

??(Jeff Leeds)

??*

??5. Gas Prices Continue Upward Spiral: The average price of self-serve
regular
gasoline spurted higher again in California and around the nation on an
increase
in demand and a switch by refiners to the more costly summer gasoline blend
required in parts of the country by air-quality regulations. Prices in
California got an extra boost from a fire at a Los Angeles-area refinery owned
by Tosco Corp. and by a change in Tosco's pricing strategy. In late March,
Tosco
increased wholesale prices to its dealers in Southern California and Arizona
and
tied prices to the cost of gasoline in the spot market. Some other major
suppliers have begun matching the Tosco increase, market experts said. Some
market watchers foresee gas at $ 3 a gallon or more.

??(Nancy Rivera Brooks)

??*

??6. General Dynamics Renews Newport News Bid: General Dynamics Corp. agreed
to
acquire Newport News Shipbuilding Inc. in a $ 2.1-billion deal that would
create
the nation's largest military shipbuilder and leave only one maker of U.S.
aircraft carriers and submarines. The proposed merger, which the Pentagon had
rejected two years ago, marks the latest in a renewed wave of consolidations
in
the defense industry and would again make General Dynamics one of the largest
private employers in San Diego. General Dynamics executives said they are
confident of receiving the necessary approvals because this time they will be
dealing with the Bush administration, which may view the takeover differently.

??(Peter Pae)

??*

??7. Disney Earnings Beat Estimates: Walt Disney Co.'s second-quarter
operating
results exceeded Wall Street's expectations as the company's studio and
consumer
products units improved, although Disney did post a net loss stemming largely
from a one-time charge related to the restructuring of its Internet portal.
Disney also confirmed that it will shrink its venerable animation unit, with a
union official estimating as many as 300 jobs of about 1,000 in Burbank could
be
cut. Separately, President Robert Iger confirmed that layoffs will be needed
to
reach Disney's previously announced goal of cutting 4,000 jobs companywide.
Disney's studio and consumer products groups showed improved results in the
quarter, while earnings were flat in its theme parks and softer in
broadcasting.

??(James Bates)

??*

??8. New FCC Chief Vows Deregulation: Repudiating decades-old media ownership
rules, Federal Communications Commission Chairman Michael K. Powell said he
envisions a broad rollback of restrictions, which could bring about a tidal
wave
of consolidation. In his most candid remarks about the role of the FCC since
taking office, Powell said he would move in early May to eliminate regulations
that prevent one company from owning a newspaper and a television station in
the
same city. Powell also told broadcasters meeting in Las Vegas that Viacom Inc.
was likely to prevail in its challenge of federal rules that prevent any
broadcaster from owning stations that reach more than 35% of the nation's
television viewers.

??(Sallie Hofmeister)

??*

??9. Ford Takes More Heat Over Explorer Tires: Ford Motor Co. came under the
most direct criticism leveled against it yet regarding last year's massive
Firestone tire recall. Two prominent consumer safety groups issued a report
saying that the auto maker was largely to blame for accidents in which Ford
Explorer sport-utility vehicles, equipped with Firestone tires, spun out of
control after the tires lost their treads. Though they blamed
Bridgestone/Firestone for producing tires prone to failure, Public Citizen and
Safetyforum.com said Ford bore the bulk of the responsibility for dictating an
insufficiently robust tire design and designing the Explorer so it would
overly
stress the tires and tip over too easily once a tire blew.

??(Terril Yue Jones)

??*

??10. American Airlines Sued Over Health Coverage: A flight attendant filed a
complaint with the Equal Employment Opportunity Commission in Los Angeles,
charging that American Airlines discriminated against some employees by
refusing
to offer insurance coverage for birth control, Pap tests and infertility
treatments. The case could test the position the EEOC took in December that
the
federal Pregnancy Discrimination Act forbids employers from excluding
contraceptives from prescription drug plans.

??(Lisa Girion)

??*

??These and additional stories from last week are available at
http://www.latimes.com/business, divided by category. Click on "Money and
Investing," "Entertainment Business" and other topics.

??* Please see Monday's Business section for a preview of the week's events.

GRAPHIC: PHOTO: Though Disney's second-quarter profit beat Wall Street
predictions, its theme-park earnings were flat. ?PHOTOGRAPHER: Associated
Press

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

?????????????????April 29, 2001, Sunday, Late Edition - Final

SECTION: Section 4; Page 17; Column 1; Editorial Desk

LENGTH: 756 words

HEADLINE: Reckonings;
The Real Wolf

BYLINE: ?By PAUL KRUGMAN

BODY:

??Recently I received a letter from an economist I respect, chiding me for my
"Naderite" columns on the California energy crisis. He just didn't believe
that
market manipulation by power companies could possibly be an important issue;
it
sounded too much to him like the sort of thing one hears from knee-jerk
leftists, who blame greedy capitalists for every problem, be it third-world
poverty or high apartment rents. The left has cried "Wolf!" so many times that
sensible people have learned to discount such claims.

??But now a bona fide wolf has arrived, whose predatory behavior is doing
terrible damage to our most populous state -- and nobody will believe it.

???True, California would be heading for a summer of power shortages even if
it
had never deregulated. And even if there was workable competition in the
wholesale electricity market, prices in that market would spike during periods
of peak demand, transferring billions of dollars from either taxpayers or
consumers to the generators.

??But the evidence is now overwhelming that there isn't workable competition
in
California's power market, and that the actions of generators "gaming the
system" have greatly magnified the crisis. The key fact is that California has
somehow remained in a state of more or less continuous power shortage and very
high wholesale prices regardless of the level of demand. A rash of outages has
kept the electricity market conveniently -- and very profitably -- short of
supply even during periods of low demand, when there ought to be lots of
excess
capacity.

??As Frank Wolak, the Stanford economist who also advises the state's power
grid, has pointed out, an outage at a power plant is a lot like an employee
calling in sick. You can't tell directly whether he is really sick or has
chosen
to take the day off for other reasons, but you can look for circumstantial
evidence. And such evidence has convinced Mr. Wolak that "generators use
forced
outages strategically to withhold capacity from the market" -- a view shared
by
a growing number of other researchers.

??Which brings us to the latest move by the Federal Energy Regulatory
Commission. On Wednesday, the commission apparently decided to offer
California
some relief, and put new price caps in place on the California electricity
market. I say "apparently" because the more you look at the plan the less
likely
it seems to be any help at all. Indeed, the measure was passed on a 2-to-1
vote,
with William Massey -- the one commissioner who has been sympathetic to calls
for price controls -- voting against it on the grounds that it would be
ineffectual.

??What's wrong with FERC's plan? First, it caps prices only in emergency
conditions -- ignoring the fact that electricity prices have stayed at
hard-to-explain levels even when there is no emergency. In effect, the plan is
laid out as if the electricity market were really competitive, in spite of all
the evidence that it is not.

??Second, even those emergency price caps are full of loopholes, offering
extensive opportunities for what Mr. Wolak calls "megawatt laundering" --
selling power to affiliated companies that for one reason or another are
exempted from the price controls (for example, the controls do not apply to
"imports" from neighboring states), then selling it back into the California
market. Severin Borenstein of the University of California Energy Institute
adds
that because the allowed price depends on the cost of generation at the least
efficient plant, generators will have a clear incentive to produce
inefficiently: "I predict we will find some plants we never heard of before
that
are suddenly operating again, and they will be pretty inefficient."

??The general verdict seems to be that this is not a serious plan. There are
serious proposals to mitigate the crisis out there -- indeed, last fall Mr.
Wolak submitted a proposal that was well received by other experts -- but FERC
has ignored all of them.

??The charitable interpretation is that FERC still doesn't get it, that it
just
can't bring itself to believe that this time the wolf is real. The
uncharitable
interpretation is that last week's action was meant to fail. The Medley
Report,
an online newsletter, calls the FERC plan "a grand exercise in posturing
without
substance . . . a very clever temporary move by the Bush administration to
deflect any political fallout" from the looming disaster.

??Whatever the explanation, the plain fact is that FERC and the administration
have yet to offer California any significant relief.

??http://www.nytimes.com

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????????????????????????????????Sacramento Bee

??????????????????April 29, 2001, Sunday METRO FINAL EDITION

SECTION: MAIN NEWS; Pg. A1; POWER CRUNCH

LENGTH: 1323 words

HEADLINE: Diesel plants spark concern They're expected to generate big
air-quality problems when predicted summer blackouts hit.

BYLINE: Chris Bowman and Stuart Leavenworth Bee Staff Writers

BODY:

??When blackouts roll across California in the coming months - as captains of
the crippled electricity grid say they surely will - tens of thousands of
miniature powerhouses will whine, cough and rumble to the rescue.

??These backup plants will ignite the same fuel that powers locomotives, ships
and 18-wheel trucks. And they'll be spewing the same pollution - only more so,
because most are old, with little or no emissions controls.

??They are diesel-powered generators, the dirtiest of internal combustion
engines. And unlike trucks and other vehicles, they've largely escaped 30
years
of air pollution restrictions because they were intended only for emergencies,
as when a storm or earthquake knocks out power.

??But, now, as a season of multiple planned blackouts appears imminent, many
California businesses are expected to fire up the old stogies more often than
was ever imagined.

??And the generators will kick in when their expelled gases can do the most
harm. The hot weather that taxes air conditioners and drains electricity
supplies also accelerates the conversion of engine exhaust to ozone gas, the
ingredient in smog that inflames airways and impairs breathing.

??"That is why we think this is going to be the most challenging summer ever
for air quality," said Luna Salaver, spokeswoman for the Bay Area Air Quality
Management District, a nine-county region with thousands of unregulated
standby
generators.

??"On those hot days when we want people to stop driving and doing things that
pollute the air, the generators will kick in, and air quality will worsen,"
Salaver said.

??No one knows how many diesel generators are scattered around the state at
hospitals, universities, factories and businesses. But air districts report
there are at least 641 in Sacramento; up to 5,000 in the Bay Area; 1,200 in
the
San Joaquin Valley; and thousands more in the smog-plagued valleys of Southern
California.

??Some are relatively clean, particularly if they have been built or
retrofitted in the last few years. But most are tiny pollution factories, and
were intended only to be run for short periods following natural disasters.

??According to the state Air Resources Board, a typical diesel generator emits
about 50 to 100 times more smog-forming compounds per unit of energy than a
typical gas-fired power plant. When the plants run for hours, people downwind
can get a heavy dose of the tiny, toxic particles contained in diesel exhaust.

??"Go down to the Greyhound bus station and have them turn on their engines
and
hang around there - that's what it's like," said Michael Scheible, deputy
executive officer of the state Air Resources Board, which regulates engines
and
fuels.

??Environmentalists say generators should be cranked up only during power
outages. But in recent months, farmers and manufacturers have pressured
regulators to redefine an emergency and allow generators to be used well
before
a blackout is ordered.

??Business groups say regulators need to be sensitive to data centers, chip
makers and other manufacturers that can't afford even a one-second
interruption
in power.

??"We would like some kind of statewide policy on when and where we can use
the
diesel generators," said Gino DiCaro, a spokesman for the California
Manufacturers and Technology Association. "Obviously, we would like to use
them
more than we can now."

??"We need to basically let go of this air-quality issue," said Mike Jennings,
a Fresno energy consultant whose clients include members of the
food-processing
and dairy industries.

??State air and energy regulators are pushing energy conservation as the best
way to avoid power outages. Nonetheless, the California Energy Commission has
been compiling a list of generators statewide to see how their use could be
coordinated, a move that stirs hope from business groups.

??"Six months ago, nobody wanted to talk about this because diesel was a big,
bad word," DiCaro said. "Now, at least we have agencies like the Energy
Commission and the Public Utilities Commission talking about how diesel
generators can fit into our electrically unreliable world."

??Environmentalists worry that, as the summer drags on, Gov. Gray Davis will
allow unrestricted use of the diesels.

??So far, the governor's staff has "held firm," said Gail Ruderman Feuer, an
attorney with the Natural Resources Defense Council, a national environmental
group. "But if blackouts start happening in a big way, they could change their
tune."

??Along with other forecasters, officials with the California Independent
System Operator, manager of the state's electricity grid, expect a flurry of
blackouts in coming months. The next two months could be critical, because
most
new power plants under construction won't go on line before July. In addition,
California will be losing one of its largest generators of electricity today
when one of two units at the Diablo Canyon nuclear power plant is taken
off-line
for 35 days of scheduled refueling.

??"You should be ready for the worst-case scenario," said Del Evans, Pacific
Gas and Electric Co.'s head of power load management, at a media briefing last
week.

??For sellers and makers of diesel generators, the gloomy predictions are a
gold mine. Small businesses, farmers, manufacturers - all are rushing to buy
generators before the blackouts hit.

??"We are busier than we have ever been," said Rob Bly, president of Tuban
Industrial Products Co., which assembles about 300 generators a year at its
plant in Sacramento. "We are twice as busy as we were in the height of the Y2K
madness."

??Bly says the generators he makes are "10 times cleaner" than ones of a
decade
ago. Still, he acknowledges, diesel is diesel.

??"If you are a hospital and you want standby power, you can't use propane.
The
fire marshall won't let you," said Bly. "That leaves you with just one thing,
and that is diesel."

??Responding to such concerns, state Sen. Rico Oller, R-Andreas, introduced a
bill this year to exempt thousands of backup generators from pollution
controls
whenever any power alert is called. The bill, however, was blocked by a Senate
committee, and environmentalists say air districts have already relaxed their
rules enough.

??"One of the big concerns is the cancer risk," Ruderman Feuer said. Air board
studies, she noted, have found that a person's lifetime cancer risk increases
50
percent if he or she lives near a big diesel generator that runs 250 hours a
year.

??In January, the U.S. Environmental Protection Agency allowed air districts
to
loosen their restrictions on generators. In turn, the South Coast Air Quality
Management District extended the number of hours that diesel generators could
be
operated each year. The San Joaquin Valley Air Pollution Control District went
even further, allowing businesses to run generators when state power reserves
drop to 1.5 percent or when the ISO predicts blackouts anywhere in the Valley.

??The Sacramento Metropolitan Air Quality Management District still requires
businesses and public agencies to wait for blackouts before generators are
fired
up. Altogether, the district has permits for 641 generators, including major
clusters at data centers and companies such as Intel.

??In the Bay Area, regulators are even more uncertain of what could happen
this
summer. Unlike other regions of the state, the Bay Area never required permits
for diesel generators smaller than 250 horsepower. (In Sacramento, the
threshold
is 50 horsepower.)

??As a result, only 12 of the region's estimated 5,000 generators are subject
to pollution controls.

??Salaver, the district's spokeswoman, said officials assumed the generators
would be used only during earthquakes, and therefore didn't need any
regulation.

??"Now, we find people are operating generators even if we are in a Stage Two
alert," Salaver said. "That is not what emergency generators are for."

??* * *

??The Bee's Chris Bowman can be reached at (916) 321-1069 or
cbowman@sacbee.com.

GRAPHIC: Sacramento Bee / Jay Mather Mark Karakas checks a newly assembled
diesel generator at Tuban Industrial Products in Sacramento.
Sacramento Bee / Sheldon Carpenter Lights out, generators on Diesel-powered
generators can save lives during emergencies, but they spew far more pollution
per unit of energy than other power sources and could significantly degrade
air
quality during the blackouts expected in the next six months.
Smog-forming compounds Power source / Pounds of nitrogen oxides per
megawatt-hour of electricity Existing diesel generator / 25 to 30 Diesel
generator wiht latest pollution controls / 7 Uncontrolled gas-fired power
plant
/ 2 to 4 Controlled older gas-fired power plant / 0.1-0.15 New "combined
cycle"
gas-fired power plant / 0.05
Cancer causing particulates (PM) Power source / Pounds of PM per megawatt-hour
of electricity Existing diesel generator / 1 to 3 Diesel generator wiht latest
pollution controls / 0.1 to 0.5 Gas-fired power plant / 0.03 to 0.07
Snapshot of generators Number of emergency diesel generators in selected air
districst: Bay Area Air quality Management District Generators: 3,000 to 5,000
Sacramento Metropolitan Air Quality Management District Generators: 641
San Joaquin Valley Air Pollution Control District Generators: 1,200
South Coast Air Quality Management District Generators: 5,000
Sources: California Air Resources Board, regional air quality districts

LOAD-DATE: April 30, 2001

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????????????????????????????????Sacramento Bee

??????????????????April 29, 2001, Sunday METRO FINAL EDITION

SECTION: MAIN NEWS; Pg. A1

LENGTH: 1544 words

HEADLINE: Why Edison, PG&E split on strategy

BYLINE: Dale Kasler Bee Staff Writer

BODY:

??One utility was more entrepreneurial, accustomed to the rough-and-tumble of
free markets - and apparently believed only a radical remedy would cure its
ills.

??The other was a more political animal, conversant with the language of
Sacramento - and confident that negotiations and compromise with state
officials
could fix its problems.

??Different cultures and different circumstances sent Southern California
Edison and Pacific Gas and Electric Co. on separate paths this month. Edison,
run by a former president of the Public Utilities Commission, negotiated a
rescue package with Gov. Gray Davis. PG&E, with fewer ties to government and
possessed of an independent streak, walked away from Davis and straight into
U.S. Bankruptcy Court.

??As California's energy crisis hurtles toward a summer of blackouts and
higher
rates, experts are debating which company found the best solution for digging
its way out of billions in debt.

??"We now have two models; it'll be interesting to see who recovers the
quickest," said Mitch Wilk, a former PUC president who is now an energy
consultant in San Francisco.

??At first blush, Edison and PG&E had plenty in common. Both utilities were
afflicted with the same problem: runaway wholesale electricity costs they
weren't able to recover from customers because of a state-mandated rate
freeze.
Both had been teetering on the edge of bankruptcy since January, when their
losses depleted their cash reserves and credit.

??But PG&E was far sicker financially than Edison. Its debts from the state's
flawed deregulation scheme reached $6.6 billion vs. $3.5 billion for Edison.
That's because Edison serves a smaller territory and has more long-term supply
contracts, so it was buying far less electricity than PG&E on the horrendously
expensive spot market.

??Faced with a comparatively manageable loss, Edison was receptive to selling
its share of California's transmission grid to the state, a deal that would
generate $2.76 billion. The proceeds, along with funds from a proposed
long-term
bond sale, would pay off Edison's debts, according to the terms of the deal.

??Although PG&E says it was willing to sell its transmission lines, too, there
was a crucial difference in the two companies' backgrounds that ultimately
would
influence their approach to the financial crisis.

??Unlike Edison, PG&E is a natural gas company as well as an electric company.
PG&E, a subsidiary of PG&E Corp., had survived the bruising wars of natural
gas
deregulation in the late 1980s and early 1990s. The experience took PG&E out
of
the cozy world of the regulated monopoly - in which the utility had exclusive
rights to its service territory but was subject to state price controls - and
into the world of competition.

??The experience gave PG&E more of a free-market bent, said a former PUC
staffer who requested anonymity.

??So even though Davis' aides say the governor offered PG&E a plan that would
have paid off its debts - including $3 billion to $4 billion for its share of
the grid - the utility balked at a key provision. While the original
deregulation called for the cap on customer prices to end in 2002, Davis was
insisting the utility remain regulated for a decade.

??PG&E wanted an immediate end to Public Utilities Commission regulation, and
would agree only to a cursory review of rates through "a jury-rigged
arbitration," Davis said last week.

??"I believe PG&E was in denial," Davis said in an interview with Bee editors
and reporters.

??PG&E says it wasn't demanding an end to regulation. Rather, what it wanted -
and what Davis' negotiator Michael Peevey agreed to in principle - was to let
the utility charge ratepayers for all its costs of buying wholesale
electricity,
said PG&E spokesman Ron Low.

??In that same deal, reached Feb. 25 in Los Angeles, PG&E made a "handshake
agreement" to sell its transmission grid, Low said. He wouldn't reveal the
price.

??In the weeks that followed, the governor's team reneged, Low said. "The
discussions and negotiations broke down because they would not agree to the
basic principles that were reached by (PG&E Chairman) Bob Glynn and Michael
Peevey," Low said.

??PG&E also became disgusted with a series of PUC rulings in late March and
early April that it believed would seriously hinder its ability to recover its
debts.

??Things came to a head April 5 when Davis proposed a rate increase and
outlined his rescue plan in a televised address. A few minutes later, Joseph
Fichera, a Wall Street financier advising Davis, and other Davis advisers
held a
conference call in which they fleshed out the details for investors. Edison
officials and directors listened in, but PG&E didn't, Fichera said.

??"They had made up their minds," Fichera said, referring to PG&E officials.

??The next morning, with Glynn dismissing Davis' speech as "a lot of words,"
the utility filed for bankruptcy protection.

??That afternoon, Davis called PG&E "selfish" and pointedly went into a
negotiating session with John Bryson, the chairman and chief executive of
Edison's parent Edison International.

??For Davis, the meeting was crucial. Although Edison had tentatively agreed
in
February to sell its transmission lines, the deal wasn't sewn up and Davis was
nervous the PG&E bankruptcy would prompt Edison's creditors to "jerk Edison
into
bankruptcy," Davis said last week.

??That afternoon, "conceptually we reached an agreement," Davis said. The deal
was announced the following Monday.

??Consumer advocates and some legislative leaders blasted the agreement as a
giveaway, and said Davis hastily sweetened the terms for Edison because he
needed to show progress on the energy crisis in the wake of the PG&E
imbroglio.

??Not true, Davis said; the basic terms were already on the table before PG&E
filed for bankruptcy. Either way, Edison was receptive to negotiating with
Davis.

??Edison's background is different from PG&E's. Because it isn't in the
natural
gas business, it doesn't have the track record PG&E does with free markets. It
is more comfortable in the regulatory and political realm, experts say.

??Notably, Bryson was president of the PUC in the 1970s - when Davis was Gov.
Jerry Brown's chief of staff.

??"He knows Gray Davis," said ex-PUC President Wilk. "He may feel a higher
level of comfort in dealing with a very adversarial process. He felt he could
rely on the governor."

??Politically savvy, Edison is one of the utility industry's biggest
contributors to national political campaigns, and it usually spends more than
PG&E on California campaigns. Edison International's board of directors
includes
Los Angeles attorney Warren Christopher, the former U.S. secretary of state
and
an elder statesman of the Democratic Party.

??Though it's open to negotiations, Edison isn't a pussycat. To the contrary,
experts say.

??"It was usually Edison that was more combative than PG&E," said Tom
Willoughby, a retired PG&E lobbyist.

??Wilk agreed, adding: "I find it curious that PG&E's being painted as the
confrontational, aggressive company and Edison as the get-along,
let's-work-with-the-regulators company."

??Edison hasn't been shy about going to Sacramento for favors; last year, for
example, Edison wanted some changes made in the operation of the state's power
grid. Instead of talking to the grid manager, the Independent System Operator,
Edison went to the Legislature, a source said. Lawmakers then pressured the
ISO
to make the changes.

??One more factor may have played into Edison's willingness to deal with the
governor.

??Last year it became involved in a protracted dispute with the Federal Energy
Regulatory Commission, which oversees the transmission grid, over how much
profit Edison could earn from the grid.

??Edison eventually won its point, but the case influenced the utility's
thinking when Davis offered to buy the grid. According to industry consultant
Barbara Barkovich, Edison figured, why wrestle with the federal government
over
profits when it simply could raise billions through a cash sale?

??Besides, Edison has a back-up plan if the Legislature scraps the grid
purchase, as many lawmakers have threatened. The company has said it would
follow PG&E's lead and file for bankruptcy.

??But its willingness to negotiate with the governor will have served it well,
even if it goes into bankruptcy, said Nancy Day, a utility industry veteran
consulting for the Legislature.

??Day said she believes the governor's appointees on the PUC will "punish"
PG&E
for its behavior. If Edison winds up in bankruptcy court, it "won't be
punished
for it," Day said.

??PUC President Loretta Lynch couldn't be reached for comment.

??Energy companies at a glance Edison Main subsidiary: Southern California
Edison Headquarters: Rosemead, Los Angeles County Customers: 4.2 million in
Southern California Chairman: John Bryson Performance: Lost $1.94 billion in
2000 on revenue of $11.72 billion Stock ticker symbol: EIX

??PG&E Main subsidiary: Pacific Gas and Electric Co. Headquarters: San
Francisco Customers: 13 million in Northern, Central California Chairman:
Robert
Glynn Jr. Performance: Lost $3.36 billion in 2000 on revenue of $26.23
billion.
Stock ticker symbol: PCG

??* * *

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

GRAPHIC: Bryson
Glynn

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????????????????????????????????Sacramento Bee

??????????????????April 29, 2001, Sunday METRO FINAL EDITION

SECTION: MAIN NEWS; Pg. A3

LENGTH: 679 words

HEADLINE: What will be fallout from California's energy meltdown?

BYLINE: Dan Walters

BODY:

??No one knows for certain how - or when - California's energy crisis will
conclude. It is an inordinately complicated four-dimensional chess game that
has
so far defied politicians' simplistic - perhaps simple-minded - efforts at
resolution.

??That said, one may speculate reasonably on the financial, social and
political consequences for California in the months and years ahead.

??Financially, Californians - especially the 70 percent who are served by
private electric utilities - will feel the pinch for years, if not decades, to
come. Before the crisis hit, California's power rates were already among the
highest in the nation. Given the nearly $20 billion in power purchase debts
that
the utilities and the state have accumulated so far, the stubbornly high
wholesale prices and other data, it's not unreasonable to project that
Californians in private utility areas will see their rates double, or rise
even
higher.

??Politicians have been laying the rhetorical groundwork for big increases,
although they've been disingenuous about the outer parameters. The burden will
fall most heavily on business customers and, coupled with doubts about power
reliability and rising natural gas prices, will damage the state's ability to
attract job-creating investment. States with low and stable energy prices
already are using the crisis as a recruiting tool. In February, Intel
President
Craig Barrett told the Wall Street Journal: "As long as California is a Third
World country, we won't build $2 billion manufacturing plants here."

??The inevitable escalation of utility rates will create distortions within
the
state as well, since utility rates for the 30 percent of Californians served
by
publicly owned utilities are not likely to rise by more than token amounts.
The
municipal utilities' rates were roughly a third lower than private utilities'
rates prior to the crisis. By the time the dust settles, they may be just half
as much. It will contribute to the balkanization of California that was
already
being defined by such factors as housing prices, ethnicity and income levels.
Low-cost regions will become magnets for people and jobs while high-price
regions will be shunned.

??The energy crisis will certainly be the defining issue of the 2002
elections,
and perhaps for others to follow. Gov. Gray Davis' popularity has plummeted
since he took charge of the crisis, laying waste to his intentions to seek an
easy re-election next year as a middle-of-the-road, business-friendly,
tough-on-crime education reformer.

??With his popularity waning, Davis may be compelled to turn left, shoring up
his base by catering to demands of labor unions, environmentalists, trial
lawyers and other liberal elements of the Democratic Party. That, in turn,
would
undermine the triangulating strategy he has pursued, in which he took
Democratic
voters for granted and cultivated business executives and social
conservatives.
Business interests are worried, for example, that Davis may now feel compelled
to sign union-friendly legislation, such as boosts in workers' compensation
and
unemployment benefits, that he vetoed in the past.

??Davis' relations with fellow Democrats in the Legislature have turned from
cool to poisonous, with lawmakers openly trashing his leadership and
management
of the energy crisis and worrying that he'll try to shift the blame to them if
the crisis turns to disaster. If Democratic leaders fear that voters will be
in
a throw-the-bums-out mood next year, they may throttle back on intentions to
maximize their party strength in drawing new legislative districts. Such
maximization would require spreading Democratic voters out among many
districts,
and such margin-thinning could make Democrats vulnerable in an energy
crisis-spawned voter rebellion. Democrats may well strive for fewer but safer
seats.

??These are but a few of the potential effects that California will experience
long after the immediate crisis has faded, whenever that may be.

??* * *

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

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

????????????????????APRIL 29, 2001, SUNDAY, FINAL EDITION

SECTION: INSIGHT; Pg. D1

LENGTH: 1419 words

HEADLINE: The energy crisis is good for you

SOURCE: Insight Senior Writer

BYLINE: Louis Freedberg

BODY:
Here's a message for pampered and overindulged citizens of the Golden State
who
complain unceasingly about high energy bills and the day-to-day prospect of
rolling blackouts: Stop whining.

???It's not a crisis -- it's an opportunity. The energy "crisis" is good for
us.

???For decades, we burned lights whenever we wanted, bought more and more
energy-guzzling appliances, bigger and bigger television sets. Today, as
citizens of the richest state in the world's only superpower, who is going to
tell us when to stop?

???"We talk about having to hit mules over the head with a 2 by 4 to get their
attention, but I don't think human beings are much more responsive or
foresighted. I hate to see people suffering, but on the other hand, if that is
the way we learn, so be it," says Ernest Callenbach, the Berkeley author of
the
futuristic 1975 novel, "Ecotopia." Callenbach's work was a major influence on
the alternative energy policies of former Gov. Jerry Brown.

???Nowhere has the ethic of unlimited consumption been more out of control
than
in the Bay Area, where the energy demands of high tech outstripped what the
electricity grid could supply. Aside from the energy needs of the industry
itself, the wealth it generated encouraged avaricious lifestyles that include
power-swilling mansions and freeways clogged with monster sport utility
vehicles.

???Perhaps the 34 days of blackouts some experts predict for this summer will
bring the discipline that eludes us. Except for the hardships the crisis has
inflicted on the poor, Californians still enjoy a sybaritic lifestyle that, in
ways, would put to shame the pharaohs of Egypt or the court of Louis XIV.
Lights
still burn when they're not needed. Except for very occasional blackouts,
electricity still flows 24 hours a day. Our daily routines have barely been
affected. A visitor from another state or country would have a hard time
finding
signs of our highly publicized "crisis."

???As we brace for deregulated electric bills courtesy of the state Public
Utilities Commission, imagine what life was like for Native Americans who
lived
for millennia in a bounteous Bay Area without microwaves, waffle irons, air
conditioning or 24-cubic-foot refrigerators. No one is suggesting that we
revert
to those days. But let's consider the thought that we may actually be better
off
without the piles of appliances whose tangle of cords clogs our homes and
offices.

???Smug Californians love to point to the state's ranking as a miserly
consumer
of energy -- only three other states consume less per capita -- to rebut
accusations that we have become greedy energy hogs. Tougher efficiency
standards
have helped, but so has our great weather. "California has a uniquely good
climate to be efficient," says Dan Kammen, director of the Renewable and
Appropriate Energy Laboratory at the University of California at Berkeley.
"Compared to countries with much harsher climates, we have not done enough."

???There's no denying the sudden, sharp pain caused by the crisis -- from
threats of sky-high electric bills to fears that California's economic engine
is
near collapse. But if we handle it right, all kinds of positive energy will
result. Potential benefits extend from the spiritual (a revival of the
conservation ethic) to the curative (making the state immune to power-problem
overloads) to the liberating (throwing off for good our dependence on the
Texas
energy overlords).

???Consumers, shocked into action by tripled or quadrupled energy bills, are
already rushing to Bay Area hardware stores, snapping up setback thermostats,
hot water heater blankets, insulating window film and outdoor clotheslines.
Alan
Ginsberg of Satco Products in Hayward, who imports from China container-loads
of
squiggly shaped energy-saving fluorescent bulbs, says, "They're flying out the
door."

???More significantly, the crisis impels the state to move ahead with the
construction of badly needed power plants. It puts on the agenda of public
debate the fundamental question of whether our energy system should be in the
hands of giant utilities or run by municipalities or by the state. It
certainly
unveiled the greed of out-of-state energy producers who have sucked billions
of
dollars from California.

???The crisis has also made us focus on fundamental flaws in our energy grid,
such as the 4,500-megawatt electricity shortage that emerged in the 1990s
while
we were all reveling in California's boom times.

???By exposing those who got us into this predicament -- producers, utilities,
regulators and politicians -- there's a chance we'll get out of it with a more
rational and efficient energy grid and be better prepared to deal with
challenges down the road. If that happens, Gov. Gray Davis might yet confound
critics who say his political prospects are sinking faster than you can say
"megawatt."

???The ease and convenience of modern life fools us into thinking that power,
water and food are infinite. Flip a switch and the lights magically go on.
Turn
a faucet and water flows. These days, the biggest challenge in gathering our
daily bread is the hunt for a space in the supermarket parking lot.

???And we want it all, leading us straight into denial. We want instant,
abundant power -- but we don't want any new power plants, especially in our
backyards. Coal is dirty. Natural gas is expensive. Dams kill salmon. Nuclear
power? Forget about it. The contradictions haven't mattered -- so long as an
endless supply of electrons flowed from our wall outlets. But that mindless
ease, the crisis taught us, is history.

???The energy crisis warns us that we must become more self-sufficient or risk
slipping toward oblivion if we continue to spend billions of dollars on
shrinking non-renewable energy sources such as coal and natural gas.

???The Roman Empire fell because of the decadence of its ruling elites. And
the
British empire, dependent on raw materials from the colonies, began to
collapse
when it became too expensive to import goods across oceans.

???A new consciousness about where electricity comes from is the first step
toward using less of it. It could also translate into a greater awareness of
other environmental causes.

???If we get the message, "the net outcome (of the energy crisis) will be a
quite profound shift in consciousness in energy conservation," predicts
Michael
Lerner, executive director of Commonweal, a health and environmental institute
in Bolinas.

???Such a turnaround is no snap.

???During the last energy crisis in the 1970s, there was a similar rush toward
conservation. President Jimmy Carter installed solar panels on the White House
roof. President Ronald Reagan took them down. He also phased out tax credits
and
other inducements to encourage development of renewable energy sources.

???Closer to home, one of former Gov. George Deukmejian's first acts was to
abolish the Office of Appropriate Technology established by Gov. Jerry Brown
to
move us away from our dependence on non-renewable fossil fuels.

???Since then, we have regressed further. Even record high gasoline prices
have
done nothing to depress the sales of SUVs, which now account for the largest
share of automobile and light truck sales (20 percent at last count).

???But today's crisis could lead to permanent changes in behavior, if only
because the technology needed to harness sun, wind and other renewable energy
sources has become far more cost effective than a generation ago. California
already gets 12 percent of its energy from these "alternative" sources, and
the
market incentives to develop them further has never been higher.

???Stratospherically high electricity bills could finally force on us the
technological changes and the discipline that Europeans -- who use two-thirds
as
much energy per capita as we do -- and the Japanese -- who use only half as
much
-- have had to embrace.

???This difficult moment in California's history has already yielded some
ecological epiphanies, like those experienced by Ernest Callenbach's
neighbors.
They installed solar photovoltaic cells on their roof. The installation now
puts
surplus electricity back into the energy grid, instead of sucking more out of
it.

???"The magical moment is the idea that by having a photovoltaic cell on your
roof, you can make your electric meter run backward," said Callenbach.
"Instead
of it going to the right, you actually see it going in the other direction.
You
say to yourself, 'Oh Lord, Oh Lord, I have seen the future.' "

??Email Louis Freedberg at lfreedberg@sfchronicle.com

GRAPHIC: GRAPHIC, Don McCartney/The Chronicle

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??????????????????????Copyright 2001 Ventura County Star

?????????????????????????????Ventura County Star

????????????????????????????April 29, 2001 Sunday

SECTION: Editorials; Pg. B09

LENGTH: 704 words

HEADLINE: Reality is what's needed for real policy
GOVERNOR: Consumers deserve to get real facts from Davis.

BYLINE: Dan Walters

BODY:

??Gov. Gray Davis is continuing to tell Californians that he's on top of the
state's energy crisis and, as he said at one gathering last week, "in three
years this problem will be a distant memory." Fat chance. All major aspects of
the situation are growing worse, not better, minute-by-minute.

??Politicians took over the crisis in January as the state's major utilities
exhausted their cash reserves and lines of credit. Davis began what he said
then
would be a short-term, emergency program of power purchases to keep electrons
flowing into homes and businesses.

??From that moment forward, the situation has steadily deteriorated, moving
toward a three-pronged disaster: severe summer blackouts, the bankruptcy of
the
utilities and sharply escalating power bills. With the bankruptcy filing by
Pacific Gas & Electric Co. and decisions by Davis and the Public Utilities
Commission to begin ratcheting up utility rates, two of the three negative
scenarios are now in place. And everyone involved in the crisis expects
blackouts this summer as demands for power soar and supplies dwindle.

??The Davis strategy, if there is one, is to continue the state's massive
power
purchases while negotiating longer-term and presumably cheaper supply
contracts,
encourage conservation, help utilities pay off their debts by selling their
intercity transmission system to the state and tapping ratepayers, and build
more power plants to ease the supply crunch.

??Currently, the governor is touting his deal with Edison International,
parent
company of Southern California Edison, to sell its portion of the grid and is
working on a similar deal with Sempra, the parent of San Diego Gas and
Electric.
But PG&E's bankruptcy casts doubt on the viability of the cash-for-grid
concept
and legislators, particularly Davis' fellow Democrats, are very skeptical of
the
Edison deal.

??Clearly, Davis rushed into the Edison deal just three days after PG&E filed
bankruptcy, in hopes of erasing the political stain of the latter action, but
its provisions are being labeled a "bailout" by critics. It places only a
token
financial burden on Edison International while guaranteeing the profitability
of
its utility subsidiary by charging its customers whatever is required to cover
its costs and past debts.

??Meanwhile, the state is spending -- by Davis' own account -- about $70
million a day or $2-plus billion a month on spot power purchases, paying
roughly
five times what consumers are being charged at the retail level. And the
current
futures market for power indicates that wholesale power prices will jump by
another 50 percent by mid-summer; higher prices and greater purchases could
increase the drain on the state treasury to as much as $5 billion a month.

??State Treasurer Phil Angelides is desperately trying to arrange a "bridge
loan" to relieve pressure on the state's rapidly vanishing reserves, but Wall
Street is reluctant to lend without a fuller explanation of what's happening
and
a specific authorization from a suspicious Legislature.

??He said Tuesday that Davis, who has maintained secrecy on power purchases,
must offer a comprehensive and public plan for dealing with the financial
squeeze.

??Meanwhile, bankers are sending strong signals that the state government is
becoming as poor a lending risk as the utilities.

??Davis, for some reason, is unwilling to declare this situation the emergency
that it is truly becoming -- one that could take a toll of human life if major
blackouts shut down air conditioners, respirators and traffic lights. He
insists
on issuing his periodic -- and wholly unrealistic -- assurances that things
will
turn out all right, even declaring to reporters this past Tuesday that "we
think
we'll have this thing licked by the end of fall."

??It's time for someone -- the governor, preferably, but someone -- to lay out
for Californians exactly what's happening, the downside financial and power
supply risks, and what's being done to deal with the looming disaster facing
this state.

??It's time for politicians to treat us as adults who can face reality, not as
children to be fed sugarcoated sound bites and slogans.

??-- Dan Walters writes for the Sacramento Bee.

LOAD-DATE: April 29, 2001

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

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

????????????????????April 28, 2001, Saturday, Home Edition

SECTION: Part A; Part 1; Page 19; Metro Desk

LENGTH: 679 words

HEADLINE: OFFICIALS CALL PRICE STABILITY PLAN ILLEGAL;

UTILITIES: AGENCY CHIEFS SAY THE FEDERAL PROPOSAL COULD ALSO CAUSE MORE
BLACKOUTS THIS SUMMER.

BYLINE: NANCY VOGEL and MIGUEL BUSTILLO, TIMES STAFF WRITERS

DATELINE: SACRAMENTO

BODY:

??Two top state energy officials said Friday that a federal plan to stabilize
electricity prices in California could increase the odds of blackouts this
summer and most likely is illegal.

??In a barrage of complaints attacking the Federal Energy Regulatory
Commission, the state's top power regulator and the head of the board
overseeing
California's transmission grid said they might challenge the federal order in
court.

??The order was approved on a 2-1 vote Wednesday and released to the public
late Thursday.

??"We're going to take whatever actions we can to oppose this to the extent
our
lawyers tell us it's illegal," said Michael Kahn, an attorney named by Gov.
Gray
Davis to head the board overseeing the California Independent System Operator.
Cal-ISO manages the transmission grid reaching three-quarters of the state.

??In a conference call with reporters, Kahn and Loretta Lynch, president of
the
California Public Utilities Commission, said the order also seems to indicate
that FERC is unwilling to force power sellers to rebate any of the
extraordinary
profits earned before last October in California's market, where wholesale
electricity prices began soaring last May.

??And, according to Kahn, the federal order illegally ties limits on power
prices to a requirement that California link its transmission grid with those
of
other states.

??"It's not within their authority to have this kind of linkage," he said.

??The federal order is scheduled to take effect May 29. Though it is not clear
how the order will play out in the state's electricity market, Lynch and Kahn
said they do not believe it will bring down power costs or help the state
avoid
blackouts, as intended.

??"They're creating a whole new, wholesale blackout system," said Lynch,
referring to a section of the order that allows large customers, such as steel
mills and food processors, to get paid to shut down when grid operators are
struggling to find enough electricity to meet demand.

??Though a somewhat similar program has helped California avoid blackouts, the
federal order requires state power buyers to name the price to which
electricity
must rise before they shut down customers.

??The requirement of naming a price could lead to more blackouts, said
Stanford
University economist Frank Wolak, because it prevents power buyers from paying
more if that's what it takes to keep electricity flowing.

??"Stating your price and sticking to it means that somebody could call your
bluff," Wolak said. "The generators just say, look, we can't supply all you
want
at the price you want to pay.

??"So they supply everything they can at the price we're willing to pay--and
no
more--and we have rotating blackouts," he said.

??Lynch said that no matter how this aspect of the FERC order unfolds, "it
ain't for Washington bureaucrats to decide when the lights go out in
California.
"

??Grid operators at Cal-ISO must quickly buy batches of electricity to
constantly match supply and demand on the transmission system serving most of
the state, excluding the city of Los Angeles. When Cal-ISO cannot find enough
power, it must order Southern California Edison, Pacific Gas & Electric and
San
Diego Gas & Electric to trigger rotating blackouts.

??The state suffered such controlled outages on four days in January and
March,
and many such days are predicted for this summer as air conditioning drives up
demand for power.

??In other energy news Friday, Gov. Gray Davis announced in Los Angeles that
electricity use in California state office buildings dropped by an average of
20% in the first two months of this year, compared to the same months of 2000.
State workers have been under orders since late last year to turn off
nonessential lights, computers, printers and other electrical appliances. Some
agencies have even changed workers' schedules, eliminating "flextime" so that
everyone works the same hours and the offices can open later and close
earlier,
shortening the energy-using day.

??*

??Times staff writer Mitchell Landsberg in Los Angeles contributed to this
story.

LOAD-DATE: April 28, 2001

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

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

????????????????????April 28, 2001, Saturday, Home Edition

SECTION: Part A; Part 1; Page 19; Metro Desk

LENGTH: 688 words

HEADLINE: BILL COULD FOIL DAVIS' ELECTRICITY OFFENSIVE;

POWER: CONGRESSMAN WANTS TO LET SMALL PRODUCERS SELL ON WHOLESALE MARKET.
BACKERS SAY PLAN WOULD BOOST SUPPLY, BUT FOES SEE IT COSTING CALIFORNIA
DEARLY.

BYLINE: JULIE TAMAKI and MIGUEL BUSTILLO, TIMES STAFF WRITERS

DATELINE: SACRAMENTO

BODY:

??A Texas congressman plans to introduce legislation next week that would
allow
California's small power producers to sell their supplies on the wholesale
market--a move that could threaten Gov. Gray Davis' plan to end the state's
energy crisis.

??The proposal by Republican Rep. Joe Barton, the influential chairman of the
House energy and air quality subcommittee, would permit producers of
alternative
and renewable energy to suspend their contracts with the state's two biggest
investor-owned utilities and sell their supplies to a third party.

??Proponents say the bill could dramatically bolster the state's electricity
supplies by luring producers whose plants have been shut down by payment
disputes to restart them in time for summer, when supplies are expected to be
tight and blackouts are feared.

??But allowing producers to sell to a third party would essentially devastate
Davis' plan to rescue the utilities and get the state out of the business of
making emergency electricity purchases.

??The governor's plan is based on California locking down the costs of
electricity from the utilities and small power producers for several years,
at a
reduced cost.

??During that time, the state would buy the remaining portion of the
electricity the utilities need to serve their customers. Meanwhile, the
utilities would regain their financial footing by selling assets to the state
in
exchange for being allowed to recover a portion of their back debt through a
surcharge on electricity bills.

??If the alternative producers were allowed to sell their power on the
wholesale market, the state could be forced to purchase much more electricity
on
the expensive open market.

??That would dramatically increase California's already massive power costs,
forcing the state to further raise electricity rates and borrow even more than
the record $ 12 billion in bonds it is planning to finance the plan. The state
has spent more than $ 5 billion buying electricity that the utilities cannot
afford, and Davis expects to spend $ 15 billion by year's end.

??"It is a way of busting the budget for the state of California," said Joseph
Fichera, a Wall Street energy consultant hired by the Davis administration. He
called the potential release of the small producers a "disaster scenario" for
the state.

??Added Stephen E. Frank, chairman, president and chief executive of Southern
California Edison: "Releasing them from their contractual obligations will
simply exacerbate the problem, because they would then be selling into the
market at additionally higher rates and just compound the state's problems."

??But Eugene Peters of the Electric Power Supply Assn. disputed that
contention. The state, he said, is already buying replacement supplies on the
open market because of reduced output by small producers.

??"If 3,000 megawatts are made available again, it will have a potentially
profound effect on what people pay for power by bolstering overall
electricity
supplies," Peters said.

??Utility executives contend that only 1,200 megawatts are offline because of
payment problems.

??California is home to nearly 700 small energy producers, which generate more
than a quarter of the electricity consumed in the state. They differ from
their
big out-of-state counterparts, which have been getting paid by the state.

??The Barton proposal will be the subject of public hearings Tuesday and
Thursday, and could move to the full House Energy and Commerce Committee for a
vote the next week. Barton could not be reached for comment Friday.

??The alternative-energy provision is one of several in his emergency energy
bill. Others designed to help the West through a difficult summer of price
spikes and energy shortages range from offering federal aid to relieving a
bottleneck in the transmission system to permitting governors to secure
waivers
from environmental rules to boost power supplies.

??The provisions dealing with waivers of environmental rules have been among
the most controversial, drawing opposition from environmentalists.

??*

??Times staff writer Richard Simon in Washington contributed to this story.

LOAD-DATE: April 28, 2001

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

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

????????????????????April 28, 2001, Saturday, Home Edition

SECTION: Business; Part C; Page 2; Financial Desk

LENGTH: 137 words

HEADLINE: BRIEFLY / ENERGY;

PUC ORDERS UTILITIES TO POST BLACKOUT DATA

BYLINE: Nancy Rivera Brooks

BODY:

??Responding to customer complaints, the California Public Utilities
Commission
ordered Southern California Edison and San Diego Gas & Electric to tell
customers more about when they will be blacked out during times of extreme
power
shortages. The PUC told Edison and SDG&E to begin listing on electricity bills
by June 1 the "outage block" into which each customer falls. ?The utilities
then
must use their Web sites to tell customers which blocks are slated for
blackouts
should more rotating outages be required. Pacific Gas & Electric Co. already
lists outage block numbers on its customer bills. A pop-up box on PG&E's Web
site shows which blocks are next in line for blackouts. Edison and SDG&E said
they have been working on implementing such notification on their own and will
comply with the PUC ruling.

LOAD-DATE: April 28, 2001

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??????????????????Copyright 2001 McClatchy Newspapers, Inc.

????????????????????????????????Sacramento Bee

?????????????????April 28, 2001, Saturday METRO FINAL EDITION

SECTION: MAIN NEWS; Pg. A3; POWER CRUNCH

LENGTH: 1109 words

HEADLINE: Cities take new look at public power The state's uncertain
electricity
picture has local officials deciding it's time to revisit the idea of
municipal
utilities.

BYLINE: Carrie Peyton Bee Staff Writer

BODY:

??From the shipwreck of California's electric industry, Albert Vera sees a
chance to build a life raft.

??"This is an opportunity that shall never come again," the former Culver City
mayor told city and county officials gathered this week in Sacramento.

??Every rate hike, every blackout, every corporate bonus is more evidence for
believers that it's time for local government to get into the power business.
They pin their hopes on municipal utility drives in San Francisco, Corona, San
Diego County and beyond.

??Over the past few years, however, only a handful of cities have set up their
own electric departments, and they are mostly limited entities that fall short
of full-fledged utilities. More commonly, cities - including Davis, Lincoln
and
Culver City - have studied the idea and rejected it, at least temporarily.

??They all face the same question, said Santa Rosa City Manager Jeffrey Kolin:

??"Is the investment worth the risk? Most of us would say we don't know yet."

??Kolin's city, like scores of others across the state, has decided it is time
to study the issue anew, motivated by the prospect of soaring electric bills,
repeated blackouts, and Pacific Gas and Electric Co.'s bankruptcy filing.

??"All their citizens are screaming," said Yvonne Hunter, a lobbyist for the
League of California Cities.

??The highest visibility fight will likely come in November, when San
Franciscans go to the polls to decided whether to create their own utility in
a
city that houses PG&E's corporate headquarters.

??"We will take it very seriously," PG&E spokesman John Nelson said.

??Shortly after deregulation in 1996, several drives for ratepayer-owned
utilities stumbled or stalled. An effort in the far north state to create a
multicounty public power agency was rejected by state regulators because some
local governments objected.

??Now, with a bill to create a state power authority moving through the
Legislature, some believe the climate may be changing.

??"One of the things this crisis has proved is the value of local control,"
said Jerry Jordan, head of the California Municipal Utilities Association.

??Since January, the cities of Hercules in the Bay Area and Corona in Southern
California have formed utilities to deliver electric service to new
neighborhoods - a strategy that sidesteps potential condemnation fights with
the
existing utility. The county of San Diego is trying to get special legislative
authority to create a regional power agency without a popular vote.

??"We could produce power better, cheaper and faster than the private sector,"
county Supervisor Dianne Jacob said.

??Not so, say PG&E and Southern California Edison.

??"There's been much more talk of it, but as soon as most folks sit down and
take a look at the realities ... they realize that they would have to buy on
the
same market, at the same outrageous prices that we and the state have been
paying," Nelson said. "The talk quickly evaporates."

??For-profit utilities have long argued that government shouldn't usurp the
role of private industry in delivering electricity. PG&E contends that the
factors that once made public power attractive - such as access to low-cost
electricity from federal dams - have evaporated.

??In addition, cities that try to withdraw from PG&E or Edison now probably
would still have to funnel money their way for years to come, to pay off
still-unsold state bonds that will stretch out a single year's power costs for
up to 15 years.

??With so many unknowns, the next few years are likelier to produce more
studies than new utilities, said a number of city officials who attended a
seminar in Sacramento this week, sponsored in part by the American Public
Power
Association.

??Former New York state Sen. Al Coppola told the group the session should have
been titled: "Independence from the greedy robber baron utilities."

??Public power backers share three key beliefs:

??* They can charge customers less because they don't have to pay dividends to
investors or pay taxes on their sales; they can respond to local preferences
on
issues like which customers pay the lowest rates and how blackouts are staged;
and existing utilities will do everything in their power to oppose them.

??"Edison did the right thing - (use) fear," to discourage Culver City from
creating an electric arm in 1995, Vera, the city's former mayor, told the
group.

??And Glenn Prentice, head of the newly created Corona electric utility, said
in an interview that a half-dozen other cities have contacted him for more
information, but he declined to name them.

??"If I do, Edison will start the attack on them. We're talking about a lot of
money," he said. "We're here to serve the public. They're here to make money."

??PG&E sees new utilities as "competition for our business," and it has a
policy of lobbying hard against them, Nelson said.

??Less than 18 months ago, it warned residents of the Placer County town of
Lincoln that a city power enterprise would be costlier and less dependable
than
PG&E, and its officials labeled the effort a "tax dodge."

??But by January of this year, PG&E barely blinked when Hercules set up a
utility to deliver power and telecommunications service in new neighborhoods.

??"We got more resistance from AT&T and PacBell," said Raj Pankhania,
assistant
to the city manager of Hercules.

??Pankhania has been researching utility drives across the state and has seen
no groundswell for public power, although he believes it can bring cities
added
revenue and more local control.

??That could change this summer, Prentice said.

??"It really depends on how bad the blackouts are."

??A blackout that left one city councilmember's daughter at a darkened school
was part of what led the Riverside County city of Corona to vote April 4 to
form
its own electric arm, he said. Heavy industry became anxious, too.

??"They said to the city council, 'Do something!' " Prentice said.

??Skipping detailed studies, Corona quickly decided to create a utility that
will build small power plants, under 50 megawatts, to serve city operations
and
new neighborhoods in the city of 127,000 east of Disneyland.

??In time, said Hercules' Pankhania, cities like his could become the living
laboratory for whichever system can deliver better service and lower rates.

??Hercules' plans calls for the older two-thirds of its homes and businesses
to
retain their PG&E service and the newest third to be served by the city
utility.

??"The existing homeowner will definitely compare five to 10 years down the
road," he said. "Then let the people decide which way they want to go."

??* * *

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

LOAD-DATE: April 29, 2001