San Jose Mercury News; June 23, 2001, SaturdaySECTION: STATE AND REGIONAL
NEWS; Testimony says Duke
???Energy actions 'unconscionably wrong'- By Dion Nissenbaum (Quotes Smutny)

Copley News Service, June 25, 2001, Monday, State and regional, 1085 words,
????3 new plants to generate electricity within weeks, Ed Mendel, SACRAMENTO

Los Angeles Times, June 25, 2001 Monday, Home Edition, Page 7, 730 words,
????The State; ; Power Regulators to Determine State Refunds; Energy:
Generators
????and California officials will work together for 15 days to solve the huge
????mathematical problem., MEGAN GARVEY, TIMES STAFF WRITER, WASHINGTON

Los Angeles Times, June 25, 2001 Monday, Home Edition, Page 7, 777 words,
????The State; ; In the Dark, Trying to See Light at End of Crisis, GEORGE
????SKELTON, SACRAMENTO

Los Angeles Times, June 25, 2001 Monday, Home Edition, Page 1, 1629 words,
????Demand Had Minor Role in Power Crisis; Electricity: Consumption has been
????predictable, and rose less quickly than in other Western states. But
supply
????grew hardly at all, and reserves melted away., ROBIN FIELDS, TIMES STAFF
????WRITER

San Jose Mercury News, June 25, 2001, Monday, SJ-POWER-PLANT, 1356 words,
????Pending Power Plants in California Face Some Problems, By Steve Johnson

The San Francisco Chronicle, JUNE 25, 2001, MONDAY,, FINAL EDITION, NEWS;,
????Pg. A1, 720 words, THE ENERGY CRUNCH; ???$9 billion showdown over power;
????State delegation seeking refunds, Lynda Gledhill, Christian Berthelsen

The San Francisco Chronicle, JUNE 25, 2001, MONDAY,, FINAL EDITION,
????BUSINESS;, Pg. B1, 1938 words, BECHTEL HOLDS ITS OWN; ???Despite economic
????downturn, S.F. construction giant's revenues remain steady, Todd Wallack

The Washington Times, June 25, 2001, Monday, Final Edition, PART A;
????COMMENTARY; Pg. A13, 917 words, Price cap perils . . . and peripatetics,
????Donald Lambro; THE WASHINGTON TIMES

Los Angeles Times, June 24, 2001 Sunday, Home Edition, Page 6, 1061 words,
????THE STATE / POLITICS; Why Riordan Can't Be Governor, TONY QUINN, Tony
Quinn
????is co-editor of the "California Target Book," an, analysis of California
????legislative and congressional campaigns, SACRAMENTO

Los Angeles Times, June 24, 2001 Sunday, Home Edition, Page 4, 408 words,
????Contradictions in State's Energy Plan

Los Angeles Times, June 24, 2001 Sunday, Home Edition, Page 4, 557 words,
????Life After the Crisis

Sacramento Bee, June 24, 2001, Sunday, Pg. A19;, 1393 words, Bush's energy
????chief confronts the spotlight Spencer Abraham finds himself in the hot
seat
????as he helps pitch the president's power plan., James Rosen Bee Washington
????Bureau, WASHINGTON

The San Francisco Chronicle, JUNE 24, 2001, SUNDAY,, FINAL EDITION, NEWS;,
????Pg. A21, 1056 words, ENERGY CRUNCH; ???Direct access falls victim to
crisis;
????Power-buying plan's future is in doubt, Bernadette Tansey, Greg Lucas

The Washington Times, June 24, 2001, Sunday, Final Edition, PART B;
????COMMENTARY; FORUM; Pg. B5, 907 words, Girding for a cooperative grid,
Glenn
????English

Chicago Tribune, June 24, 2001 Sunday, CHICAGOLAND EDITION, News; Pg. 10;
????ZONE: C; ACROSS THE NATION., 263 words, Power plant whistleblowers allege
????production sabotage, Items compiled from Tribune news services.,
SACRAMENTO,
????CALIFORNIA

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

???????????????????????????June 23, 2001, Saturday

SECTION: STATE AND REGIONAL NEWS

KR-ACC-NO: ?K1692

LENGTH: 1056 words

HEADLINE: Testimony says Duke Energy actions 'unconscionably wrong'

BYLINE: By Dion Nissenbaum

BODY:

??SACRAMENTO, Calif. _ A major energy company accused of gouging California
ran
one plant like a "yo-yo," scaling back the flow of electricity even as the
state
was trying desperately to find power to avert blackouts, a former plant worker
told state investigators Friday.

??In a packed Capitol hearing room, former mechanic Glenn Johnson called such
actions at the Chula Vista plant run by Duke Energy "absolutely,
unconscionably
wrong."

??Armed with control room logs taken from the plant, Johnson and two other
former plant workers publicly offered the special Senate committee
investigating
alleged price gouging the first inside accounts of power plant operations and
provided them with hard evidence for their ongoing investigation.

??Lawmakers said they wouldn't draw conclusions until they get a chance later
this summer to hear from Duke, which leases the plant from the Port of San
Diego.

??But one senator, Steve Peace, D-La Mesa, said he is already convinced that
Duke has broken its contract, which requires the plant to use "prudent
practices."

??"I believe the evidence is clear that Duke has operated, and is operating in
violation of its lease," Peace said. "I believe the port can take it back."

??While not given a chance to rebut the testimony at the hearing, Duke
executives dismissed the three men as misguided former workers who had small
roles in a big operation and didn't understand what they were seeing.

??"This is one more page in a very long chapter of misinformation disseminated
by people who are not telling, or do not know, the full story," said Bill
Hall,
vice president of Duke's West Coast operations.

??Duke did change the amount of energy it produced, Hall said. But, in
everycase, he added, the company did so at the direction of state regulators
who
oversee the ebb and flow of power.

??"Duke Energy is not gouging," he said.

??Senate investigators plan to match state records to the Duke logs to see if,
as the company executives argue, each decision was made at the request of
regulators. After reviewing the records Friday afternoon, the committee staff
expressed skepticism about Duke's contention that the decisions, some of them
made after midnight, were directed by state officials.

??Assistant plant operator Jimmey Olkjer decoded the handwritten logs for
lawmakers, pointing out when and how Duke shifted power production. In one
case
on Jan.16, the logs show, the plant directed workers to slow production from
92
megawatts to 30 megawatts. An hour later, the state issued a Stage 3 alert
indicating power reserves were low and blackouts imminent. In the next few
hours, Duke pushed production up to 149 megawatts.

??Such moves, Olkjer said before the hearing, appeared to be an effort to
manipulate the market to boost prices.

??California uses complex maneuvers to make sure that it has enough power. At
times, because of congestion on transmission lines, regulators actually pay
energy companies to scale back production because they can't move it around
the
state.

??But state regulators declined to comment on the allegations or the logs,
saying they are prevented from discussing specific arrangements with Duke or
other private companies. The Chula Vista plant produces enough power for about
500,000 homes. Duke has leased the plant since 1998.

??Under scrutiny

??Along with the state's other major power producers, Duke is under intense
scrutiny for its actions in California's dysfunctional electricity markets.
The
company is facing state and federal investigations, as well as a class-action
lawsuit.

??Lt. Gov. Cruz Bustamante, who is spearheading a taxpayer lawsuit against
Duke
and other power companies for alleged price gouging, called the whistle-blower
testimony "the tip of the iceberg."

??This week, federal officials again ordered Duke to refund California what
could be millions of dollars for alleged overcharges. Duke has admitted that
it
charged a record $3,880 per megawatt-hour in January for some of its power.
The
company said it provided the power at California's request as the state tried
to
head off blackouts, tacking on an 80 percent surcharge because of Pacific Gas
&
Electric Co.'s credit problems.

??Executives for Duke and other power producers will head to Washington, D.C.,
next week to take part in marathon settlement talks over alleged price
gouging.
Gov. Gray Davis and other California leaders contend that the companies
overcharged the state by nearly $8.9 billion.

??At the hearing, Olkjer and Johnson were joined by former mechanic Ed
Edwards.
All three worked for the plant's former operator, San Diego Gas and Electric,
and continued working during a two-year transition period when Duke took over.
They were all let go in April.

??Edwards and Olkjer told the committee that they had stellar personnel
records. Johnson conceded that he was not considered a model employee because
he
sometimes complained to his union about mistreatment and spent a lot of time
off
work serving in the California National Guard.

??Johnson and Edwards told lawmakers that they were directed to throw out
perfectly good spare parts to clear space in the plant. They said that
sometimes
caused delays of days or weeks in getting it back up-and-running.

??Duke said it threw out the spare parts to get rid of old or obsolete
equipment.

??The hearing drew sharp criticism from the state's largest independent power
producer group.

??In a letter to Sen. Joe Dunn, the Garden Grove Democrat heading the
committee, the group accused lawmakers of setting aside facts in pursuit of a
media event "giving credence to the unsustainable allegations of disgruntled
employees."

??"The committee is at a crossroads," wrote Jan Smutny-Jones, executive
director of the Independent Energy Producers. "It can choose to engage in
fact-finding and analysis, or it can be reduced to a witch hunt in pursuit of
headlines."

??Dunn angrily challenged the characterization of his hearings and said he
plans to give Duke and other power companies plenty of time to respond in the
coming weeks.

??Sen. Bill Morrow of San Juan Capistrano, the ranking Republican, agreed with
Dunn and rejected notions that the committee is a "kangaroo court."

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

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

Copyright 2001 Copley News Service
Copley News Service
June 25, 2001, Monday

SECTION: State and regional

LENGTH: 1085 words

HEADLINE: 3 new plants to generate electricity within weeks

BYLINE: Ed Mendel

DATELINE: SACRAMENTO

BODY:

??Gov. Gray Davis said yesterday that three new power plants will begin
operating within 17 days, giving California its first new major generators in
more than a decade and easing the threat of blackouts this summer.

??News about the plants comes on the heels of other developments about
conservation and additional power supply that have given state officials
increasing confidence in California's ability to survive the power crisis this
summer.

??''Optimistically,'' said Davis, ''our conservation and generation effort
will
help us minimize any disruptions this summer.''

??One of the new plants was scheduled to begin operating in August but instead
will come on line Wednesday. Edison International's Sunrise plant near
Bakersfield will supply 320 megawatts. A megawatt can provide enough power for
750 to 1,000 households.

??In addition to the Edison facility, Calpine will open its 500-megawatt
Sutter
plant near Yuba City on July 2 and its 559-megawatt Los Medanos plant near
Pittsburg 10 days later. Both plants are expected to open according to
schedule.

??''In the next 17 days we will put more power on line than California did in
the last 12 years,'' Davis said.

??During the past decade, the governor said, the state added less than 1,000
megawatts with a number of small power plants, despite population growth and
increased power demand from the high-tech industry.

??The fast-track modernization of a 450-megawatt Huntington Beach plant is
expected by late August. The plant was shut down about five years ago.

??By September, Davis said, the addition of eight to 10 small plants that
operate during peak-load periods, as well as increased power from a variety of
other small generators, will raise the total of new power coming this summer
to
4,000 megawatts.

??As further protection against blackouts, state power buyers revealed last
week that in recent months they have been able to send some surplus
electricity
to a Canadian utility, BC Hydro, which will return the power in July and
August.

??Despite efforts to increase the state's energy supply this summer, more
ultimately will be needed. California has been importing about 20 percent of
its
power in recent years. Even though about a dozen power plants are approved or
under construction, Davis does not expect supply to match demand until late
2003. Until then, the state will need surplus electricity generation to make
the
deregulated market work properly, experts say.

??Davis has said in the past that California should add 20,000 megawatts of
power generation in the years ahead. A new state Power Authority has been
created that could construct or buy power plants if the private sector does
not
build a surplus of electricity generation.

??Also, state officials suggest the trend among Californians to conserve
electricity may grow.

??The state is spending $850 million on conservation programs, including
funding for energy-efficient equipment and an advertising campaign. The
program
gives refunds to customers who dramatically reduce their electricity
consumption
this summer.

??State officials also expect electricity use to be reduced by ''sticker
shock'' from rate increases beginning this month for Edison and Pacific Gas
and
Electric customers. Ratepayers are exempt from the increase if they use 130
percent or less of the baseline level of electricity, a minimal amount that
varies with regional climate zones.

??A proposal to increase rates for San Diego Gas & Electric customers is
pending before the state Public Utilities Commission.

??In addition to announcing the new plants, Davis yesterday reiterated his
demand that California deserves $8.9 billion in refunds from overcharges by
power companies. That issue will be the subject of mediation sessions that
begin
today in Washington.

??When the Federal Energy Regulatory Commission imposed regional price limits
last week, the regulators asked an administrative law judge to recommend
possible refunds by generators for overcharging.

??Davis said the California negotiating team will be led by Michael Kahn,
chairman of the Independent System Operator, which runs the state's
electricity
grid.

??Davis said Kahn's team will present information supporting California's
claim
of overcharging. The administrative law judge, Curtis Wagner Jr., suggested
last
week that California may be owed a smaller amount, $2 billion to $2.5 billion.

??The governor sent Wagner a brief letter replying to the judge's request for
a
list of issues that should be considered in the conference.

??''Our list is short,'' Davis said in the letter. ''The conference must
address the need to have FERC order power sellers to refund the estimated $8.9
billion they have overcharged the people of the State of California.''

??While that session is taking place, Davis today plans to meet in Sacramento
with President Bush's two new appointees to the five-member FERC, Pat Wood III
of Texas and Nora Brownell of Pennsylvania.

??Davis said that when he met with the president last month, Bush agreed to
send Wood to California to investigate natural gas prices, which are several
times higher in California than in New York.

??''We agreed that there is no explanation for the disparity of prices between
California and New York when it comes to natural gas,'' Davis said. ''We
agreed
that was wrong.''

??The governor also said he will meet this morning with three former employees
of Duke Energy's Chula Vista power plant who have accused the company of
altering the plant's output to boost power prices.

??The employees last week told a state Senate committee that they were ordered
to reduce power during peak-load periods and throw away good replacement
parts,
which sometimes delayed maintenance.

??''There may be another side to the story,'' Davis said. ''But these three
employees worked 20 years, had no reason to mislead the state Senate, and they
testified under oath.''

??Duke denied wrongdoing and said power was reduced at the request of the
agency that runs the power grid, the Independent System Operator.

??A Davis spokesman said yesterday that he did not know if the former
employees
could qualify for a reward. In April, state Attorney General Bill Lockyer
announced a whistle-blower reward for information on price-gouging by power
generators.

??Lockyer said the reward would be based on a percentage of what the state
recovers as a result of the information. He said the reward could be worth $50
million or more.

??WAGNER-CNS-SD-06-24-01 2151PST

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

??????????????????????June 25, 2001 Monday ?Home Edition

SECTION: California; Part 2; Page 7; Metro Desk

LENGTH: 730 words

HEADLINE: The State;
;
Power Regulators to Determine State Refunds;
Energy: Generators and California officials will work together for 15 days to
solve the huge mathematical problem.

BYLINE: MEGAN GARVEY, TIMES STAFF WRITER

DATELINE: WASHINGTON

BODY:

??Starting today, federal power regulators will begin trying to solve one of
the riddles of the energy crisis: How much of a refund will California get?

??One thing seems clear: The reduction will be a lot more than the
$125-million
refund ordered to date, in all likelihood soaring to more than $1 billion.

??Over the next 15 days--the Federal Energy Regulatory Commission is mandating
no weekends off--warring representatives from power companies and the state of
California will sit at the same table in a government conference room while a
FERC task force wrestles the question to the ground.

??The task is to determine the price that power would have cost if FERC's
decision to impose soft caps had been made not last week, but last fall.

??It is a daunting mathematical problem, factoring in hourly charges during
the
last eight months. To come up with a total, federal regulators, state
electricity officials and power generators must determine what the highest
price
for a megawatt should have been under the soft price caps now in effect. Then
they have to figure out which companies--if any--were charging more.

??Under the recent FERC ruling, the price of electricity during any given hour
cannot exceed the actual cost of generating the least efficient--or most
expensive--power coming into the grid.

??Curtis L. Wagner, the 72-year-old chief judge for FERC who is overseeing
negotiations on California's overcharges, said of this morning's events: "It
will be a zoo."

??Wagner, who headed into the weekend with three inches of documents to sort
through, explained that Gov. Gray Davis wants $9 billion knocked off the
amount
the power generators charged California. "I don't really think it's that
high,"
said Wagner, predicting the refund will be more than $1 billion but probably
far
from $9 billion.

??"We have folks trying to do some adding now and some work on what the number
should be," he said.

??Wagner said the money at stake will be the most he has worked on in his
nearly three-decade career at the agency.

??Until recently, the likelihood of massive refunds seemed nil. Although
California lawmakers--led by Davis--had demanded relief for costs that ran as
high as 10 times or more than the rates a year ago, FERC officials had not
agreed.

??And their minds seemed set. When FERC first proposed remedies for the
California price increases late last year, commissioners said: "Refunds may be
an inferior remedy from a market perspective and not the fundamental solution
to
any problems occurring in California markets."

??To date, FERC has ordered $125 million in refunds for alleged overcharges in
January and February.

??But with the recent appointment of two new commissioners by President
Bush--Republicans Patrick H. Wood III of Texas and Nora M. Brownell of
Pennsylvania--FERC's position softened, leading to the price mitigation
ordered
last week.

??Now FERC is taking a closer look at the prices already charged.

??California lawmakers have pegged overcharges at nearly $9 billion since the
California market went haywire last summer--a number that comes from a study
done by Cal-ISO, the operator of California's electricity grid. Cal-ISO
officials acknowledged last week that the study might have significant flaws.

??Among companies that may be required to reduce their bills are energy giants
Enron Corp., Mirant Corp., Duke Energy Corp., Williams Cos. and Reliant Energy
Inc.--all of which are expected to have representatives at the negotiations.
The
companies have hotly disputed the amount of overcharges alleged by Davis and
other California lawmakers and point out that they have yet to be paid for the
vast majority of electricity sold in the state in recent months.

??Today, Wagner said he plans to make opening statements to the media. After
that, he said he hasn't determined how much of the wangling will be done
behind
closed doors. If the parties don't come to an agreement in 15 days, Wagner
will
have seven days to make a recommendation on refunds to FERC's five
commissioners.

??It is a process that may be repeated down the road if Sen. Barbara Boxer
(D-Calif.) and other California politicians get their way. Boxer has
introduced
legislation that would give FERC retroactive power to order refunds--all the
way
back to July 2000, when San Diego first faced huge spikes in electricity
costs.

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

??????????????????????June 25, 2001 Monday ?Home Edition

SECTION: California; Part 2; Page 7; Metro Desk

LENGTH: 777 words

HEADLINE: The State;
;
In the Dark, Trying to See Light at End of Crisis

BYLINE: GEORGE SKELTON

DATELINE: SACRAMENTO

BODY:

??It's dusk in the Capitol office of state Sen. Debra Bowen. Actually, it's
midafternoon. But she has the lights off to save electricity and not much sun
is
coming through a shaded window.

??Her thermostat is set at 76 degrees, but it feels warmer because outside
it's
100 and she's up on the fourth floor.

??There's a bright red, oversized cover framing a shiny white light switch by
the door. You can't miss it leaving the room. "That's for the people who have
trouble turning off lights," she says.

??Bowen, 45, a Marina del Rey Democrat and environmental lawyer, represents
the
good side of term limits. Conscientious and cutting-edge. She replaced a
termed-out, octogenarian senator, Ralph Dills, first elected to the
Legislature
in the Great Depression.

??Since coming to the Assembly in 1992, Bowen has focused on environmental
protection, foster children and high-tech--most recently trying,
unsuccessfully,
to guard the privacy of Internet consumers.

??But now, like the Legislature itself, she's bogged down with an
all-consuming
issue that won't go away. The senator has been thrust into the middle of a
tangled energy mess she and other lawmakers unwittingly helped create with
their
lemming-like votes five years ago.

??This time, however, Bowen is a major player as head of the Senate energy
committee.

??Something must be going right, I note. We haven't had any of those rolling
blackouts everybody had predicted for June.

??"My biggest concern," she replies, sitting in the twilight, "is that we're
being fooled right now because of the early snowmelt. We've got more power
than
we need."

??Hydroelectric power being generated by the Sierra runoff, she explains, is
being sent to British Columbia. BC is using the California power and keeping
its
own water stored behind dams. Later in summer, as this state runs dry, BC will
generate hydro and send it to us.

??Thus every kilowatt California saves today can be banked in Canada and later
withdrawn during tough times.

??"I don't want people to get the idea that just because we haven't had Stage
2s or blackouts we shouldn't be concerned," Bowen says. "We're still going to
be
short power this summer. . . .

??"But how do you expect Jane Citizen to figure all this out?"

??Especially when Joe and Janice Legislator are having such a difficult time.

??There is one vexing problem still facing the Legislature on energy. It has
passed bills promoting conservation, expediting power plant construction,
authorizing the state to sign long-term contracts for wholesale electricity,
creating a state power authority and approving bond sales to finance it all.
What's left is how--and whether--to save Southern Cal Edison from bankruptcy.

??The Legislature faces an Aug. 15 deadline to approve a memo of understanding
between Gov. Gray Davis and Edison. After that, the MOU presumably goes poof
and
Edison collapses.

??But the Legislature has a cocky way of ignoring and testing deadlines. Right
now there must be 100 ideas about how to handle Edison. Decision-making is
diffused. Bowen's energy committee, for example, is just one of three that is
holding Senate hearings on the Edison bailout.

??"There's not much consensus," she acknowledges.

??The governor's proposed Edison rescue involves state purchase of the
utility's transmission lines for about $2.8 billion. Democrats seem ambivalent
and Republicans are opposed. Long ago, the MOU was diagnosed as DOA.

??Senate leader John Burton (D-San Francisco)--the most powerful
legislator--thinks the MOU is a giveaway to Edison.

??In the Assembly, Speaker Bob Hertzberg (D-Sherman Oaks) has been pushing a
unique alternative he believes could also work for PG&E, now struggling in
Bankruptcy Court. Under his plan, only the "core" residential and small
business
users would be served by private utilities. Electricity would be generated by
the utilities themselves and regulated by the Public Utilities Commission.
Like
the good old days before disastrous deregulation.

??The "noncore" big power users who wanted deregulation in the first place
would buy electricity directly from the generators and marketers, presumably
at
a savings. "They're the ones who brought this on us," Hertzberg says.

??But, he adds, "there's a billion moving parts" and they're not fitting well.
For one, there may not be enough power to buy directly now that the state has
cornered so much in long-term contracts.

??Bowen is one of the better ones. But not even she is sure what the
Legislature's next step should be. "We don't have a lot of room to move," she
says.

??Nor a lot of time. If Edison goes bankrupt, it truly will be a dark day in
the Capitol.

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

??????????????????????June 25, 2001 Monday ?Home Edition

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

LENGTH: 1629 words

HEADLINE: Demand Had Minor Role in Power Crisis;
Electricity: Consumption has been predictable, and rose less quickly than in
other Western states. But supply grew hardly at all, and reserves melted away.

BYLINE: ROBIN FIELDS, TIMES STAFF WRITER

BODY:

??California has been depicted as a power addict whose growing habit led
inexorably to the crisis that has roiled the state since May 2000.

??Yet the state's electricity yen is the wrong target for blame--the least
volatile and least decisive piece of a larger puzzle, an analysis of
consumption
patterns shows.

??California consumption has been as regular as a heartbeat in the last
decade,
sloping upward gently with a blip each summer. In the last year, demand's
predictability made it the lone calm spot within a hailstorm of dizzying price
peaks and supply lurches.

??Moreover, California's power consumption increased far less than that of its
Western neighbors, on whose excess supply it had come to depend.

??"Yes, demand grew in California, but what people who have that discussion
ignore is that demand in the rest of the West grew even faster," said Severin
Borenstein, director of the UC Energy Institute in Berkeley. "We're all part
of
the same grid."

??Within the complex, sometimes murky power picture, demand was a problem
hiding in plain sight.

??Starting in 1998, energy agencies began to warn that its slow swell, coupled
with stagnant supply, had left California with wafer-thin power reserves. In
retrospect, these agencies say, deregulation left them powerless to prevent
the
impending collision between supply and demand.

??When they hit head-on last summer, the amount of power used day to day by
Californians often had no relationship to the periods when the state
experienced
blackouts or the highest wholesale prices, analysts said.

??In the last 10 years, California's power consumption has moved subtly, never
advancing more than 3.7% a year and, even at its height, lagging behind such
other measures as job growth and economic output.

??In the early 1990s, recession savaged heavy-duty power users, ranging from
manufacturers to agricultural interests to the aerospace industry. The
industrial sector's usage actually declined from 1990 to 1995.

??Overall, consumption inched up so slowly in the decade's first half--just
1.3%--that demand was of little concern as policymakers assembled the
mechanisms
of deregulation, current and former industry officials say.

??The system's reserve cushion--the extra supply available at peak times--was
estimated in 1993 at a robust 12% to 14.5%, without a single electron imported
from beyond California's borders. With pressure off, utilities shifted
resources
out of programs promoting conservation and redistributing peak-hour
consumption.
Instead, they focused on new technologies that had little immediate payoff.

??"There was less emphasis on demand management," said Barbara Barkovitch, an
Oakland-based consultant who served on the California Independent System
Operator's board from its formation in 1998 until last June. "There was
nothing
nefarious about it, but people always assume the future will be like the
present."

??As the economy rebounded, consumption growth averaged about 3% a year. That
slight escalation--which fell within the expectations of forecasters at the
California Energy Commission--took on out-sized significance because it
occurred
as supply stagnated.

??"The problem was not one of demand in isolation, but that our demand kept
growing steadily, supply did not grow much at all, and the gap just shrank
progressively," said Ahmad Faruqui, the Palo Alto-based Electric Power
Research
Institute's area manager for retail and power markets.

??Regionally, the expansion was uneven, weighted toward the fast-developing
San
Diego area and Northern California's tech corridor. Consumption in San Diego
Gas
& Electric's service area rose more than 17% from 1995 to 2000 and, for the
decade, increased almost twice as much as in the state overall.

??The commercial sector's usage grew twice as fast in the decade's last five
years as it had in its first half as the economic mix shifted toward services
and offices loaded up on energy-eating technology.

??The heady affluence of the late '90s also inflated residential consumption.

??Consumers splurged on bigger houses, pools and spas, more appliances and
up-to-the-minute gadgetry, said Sean Randolph, president of the Bay Area
Economic Forum. Fixed retail prices meant consumers had little incentive to
rein
themselves in, analysts said.

??"We decided we were not going to have a process for adjustment on the demand
side," Borenstein said. "We relied entirely on the supply side and that turned
out to be a huge mistake."

??Still, even as consumption grew, businesses became more efficient. Measured
per capita, California's consumption remained modest compared to that of less
efficient, more weather-intensive states.

??But gradually and quietly, the system's reserve margin shrank to 4% by 1998,
a third or less than they had been at their fattest. Even that depended
heavily
on seasonal help from the other states that share California's grid, help they
were increasingly less able to give.

??Electricity consumption in Arizona, Colorado and Utah grew at about twice
California's rate from 1988 to 1998. It expanded three times as fast in
Nevada.
In these states, too, supply did not keep up.

??The collapse that started in May 2000 could have begun a year earlier if not
for cool weather and plentiful rain, yielding cascades of Pacific Northwest
hydroelectric power.

??At least six state, regional and federal energy agencies issued reports from
late 1998 to early 2000 warning that California's reserve margin had
shriveled,
that help from other Western states might decrease, and that the state was one
hot summer away from disaster.

??"The Arizona-New Mexico-Southern Nevada and the California-Mexico areas of
[the Western transmission grid] may not have adequate resources to
accommodate a
widespread severe heat wave or a higher-than-normal forced outage rate for
generation," wrote the North American Electric Reliability Council in its June
1999 summer assessment. "Those areas are experiencing a continuing trend of
peak
demand growth exceeding the addition of new generation facilities."

??But in the deregulated system, regulators no longer had a decisive hand in
balancing supply and demand. Officials at the California Energy Commission say
even analyzing the situation became harder as utilities became less methodical
in submitting their consumption data.

??"Things got sloppier," said Michael Jaske, the commission's chief forecaster
since 1980. "The utilities started letting that stuff slide, poorer data was
coming in to us, and our management wasn't going after them the same way."

??Marketplace incentives were supposed to replace government control, but new
supply did not materialize even though rising demand had created a clear-cut
opportunity.

??Private generators say the system's uncertainties, plus California's
environmental fervor and slow regulatory process, prevented the market from
working. Borenstein's assessment is blunt: "The reason that no one built power
plants was that no one thought you could make money at it."

??Ultimately, the flurry of studies predicting an oncoming crisis circulated
among regulators and power industry insiders, but prompted little urgency when
it came to curtailing demand. The Davis administration focused on supply
instead, taking steps to expedite the approval process for power plants, Davis
spokesman Steve Maviglio said.

??"Hindsight is always 20-20," he said. "We weren't having blackouts in '99,
so
it didn't pop up on anyone's radar."

??Summer 2000 took care of that, hitting like a sonic boom.

??Hot weather caused consumption to jump almost 4% year-over-year, double the
decade-long average. Peak demand from May through August was consistently
about
10% higher than in summer 1999, averaging an extra 3,200 megawatts per
day--enough to power more than 3 million homes.

??On Aug. 16, the day with the year's highest peak, Cal-ISO's so-called
spinning reserve--the amount of capacity that can be brought on line within 10
minutes--was 1.2%.

??The causal link between heightened usage and other pressure signals, from
higher spot-market prices to staged emergencies, seemed clear.

??Or was it? Peak demand still fluctuated within a narrow range only
marginally
above long-standing forecasts. The so-called superpeak--the moment of highest
usage on summer's most brutal day--was lower than in uneventful 1999.

??Moreover, after summer's heat ebbed, California's consumption tapered.
Still,
the power crisis' other symptoms raged on.

??In November and December, wholesale power prices soared, California paid far
more for natural gas than the rest of the nation, and the first rolling
blackouts hit. Yet peak demand traced an almost identical line as it had the
year before, averaging a few megawatts less.

??Peak demand was down again from January to April when rolling blackouts
returned, averaging about 1,600 megawatts less than in the same stretch of
2000,
which passed without a single emergency.

??State officials were quick to blame suppliers, but many industry analysts
point to the region-wide supply-demand equation.

??These forces may continue to dominate, they acknowledge, even though
Californians have cut back on consumption faster and more this year than state
officials had dared to hope.

??In May, peak demand dropped 10.4% below its 2000 level and consumption fell
11%, marking the fifth straight month of reductions.

??Electricity Demand

??Electricity use in California has shown no dramatic shifts over the last
several years, increasing at an average of about 2% a year. In the last year,
its predictability has stood in stark contrast to the gyrations of supply and
wholesale prices. Total consumption of electricity in the state, in thousands
of
gigawatt-hours:

??*

??Source: California Energy Commission

GRAPHIC: GRAPHIC: Electricity Demand, Los Angeles Times

LOAD-DATE: June 25, 2001

?????????????????????????????11 of 141 DOCUMENTS

??????????????Copyright 2001 Knight Ridder/Tribune Business News
??????????????????????Copyright 2001 San Jose Mercury News

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

????????????????????????????June 25, 2001, Monday

KR-ACC-NO: SJ-POWER-PLANT

LENGTH: 1356 words

HEADLINE: Pending Power Plants in California Face Some Problems

BYLINE: By Steve Johnson

BODY:

??SAN JOSE, Calif.--Although California's summer energy outlook seems to be
brightening, state leaders still are counting on new power plants to boost
competition and lower electricity prices in years to come.

??They may end up disappointed.

??Even with 42 new power plants in the works before the California Energy
Commission as of early last week, the state can't be sure of how much power
they
will produce or what prices they will charge, experts say. That could prove
troublesome, since 70 percent of the power the state plans to buy through
long-term contracts is supposed to come from these new plants.

??Nor is there any guarantee of the price these plants might charge for the
rest of their power on the spot market, despite last Monday's order by federal
regulators to generally limit spot prices across the West.

??Like much of what has happened since the state passed deregulation, the
future appears cloudy. Here's why:

??-- Critics say the price caps ordered Monday by the Federal Energy
Regulatory
Commission contain loopholes that could allow California's electricity costs
to
soar on days when it is desperate for power. And when the Mercury News asked
12
of the companies involved in the recently approved or pending power plants if
they could promise that their spot market prices would be cheaper than what
California has been paying recently, none could.

??-- Of the 25 mostly private entities involved in these new power plant
projects, only six are generators new to the state, and most of their plants
are
relatively small. That may slow the development of a more competitive
electricity market, which state officials say is needed to lower prices.

??-- More than a third of the electricity to be produced by these new
operations would be controlled by firms accused in recent lawsuits or
governmental actions of questionable pricing and, in some cases, outright
gouging. State officials claim that some of these companies, among other
things,
have shut down their plants when electricity demand was high to artificially
crimp supplies and inflate prices.

??-- Some experts doubt that all of the proposed plants will get built.
Several
power companies acknowledged that the intense criticism of them by California
officials and uncertainties over the economic viability of owning plants here
could cause them to delay or even abandon their projects. Others suspect these
firms eventually may cancel some of the plants they have proposed, to keep
power
in short supply and prices high.

??"I'm concerned," said California Public Utilities Commissioner Carl Wood,
when asked about the makeup of the firms proposing the new plants. "It's the
same cartel. We will have more generation, but we will have the same players
owning and controlling it."

??Such comments irk power suppliers, who have repeatedly denied breaking any
laws or regulations governing the sale of wholesale electricity. Many of these
entrepreneurs find it particularly galling that the very state officials
accusing them of price gouging are begging them to build plants in
California.

??Few politicians have been as vehement in their denunciation of electricity
suppliers as Gov. Gray Davis. Yet he is among those relying heavily on the new
power plants these companies are developing to help pull California out of its
energy crisis.

??"Eventually when supply and demand come back into something approaching
balance, there will be genuine price competition," Davis said in December. He
repeated the point earlier this month, proclaiming that "by the fall of 2003,
we
will have more power than we need. That will solve the long-term problem."

??Davis isn't alone. Although power costs have fallen in recent weeks and
federal officials may impose tougher price controls on electricity, the
assumption that more plants is the key to solving California's troubles is
taken
as gospel by many state and federal officials.

??It seems logical enough. More power presumably would not only ease the
threat
of blackouts, but relieve California of the need to pay exorbitant prices on
days when electricity is in short supply.

??But calculating how much more power the state will wind up with, based on
how
many plants are on the drawing board, is risky, say some state regulators and
consumer advocates.

??"I have no confidence at the moment that a majority of those new plants will
ever materialize," because power companies are likely to maintain an
electricity
shortage to keep prices high, said Michael Shames, of the Utility Consumers
Action Network. "Why would they want to change what they've got? They've got a
sweet deal."

??Another reason plants might not get built is politics. Several firms with
projects in the works claimed that threats by state officials to seize their
plants or impose a windfall profits tax on their sales had made it harder to
obtain financing.

??"Every time these politicians start spouting off to improve their own
political careers, they don't realize the damage they're doing," said Gary
Ackerman of the Western Power Trading Forum.

??Just this month, Mirant Corp. of Atlanta received state permission to build
a
530 megawatt plant in Contra Costa County -- enough to supply power to about
400,000 homes -- and it has applied to build a similarly-sized generator in
San
Francisco. But its spokesman Chuck Griffin said both projects are on hold,
until
Mirant feels more comfortable about the state's political and economic
climate.

??"We have to be able to determine that it's going to be a viable investment,"
he said.

??Even if all 42 plants are built, many of the companies proposing them were
skittish about promising cheaper prices. They said it depends on such things
as
the future cost of natural gas, which many of their plants use for fuel.

??One firm California is counting on is Calpine Corp. of San Jose, which
already commands a modest fleet of small plants in the state and is developing
nearly one fourth of the 42 new plants.

??Although Calpine has earned huge profits in recent months, it has a
relatively good reputation among consumer advocates and state investigators
who
have reviewed its confidential power sales data. Moreover, Calpine's name is
conspicuously absent from recent lawsuits and federal legal filings that have
either accused other firms of gouging or questioned the reasonableness of
their
prices.

??Much of the power to be generated from Calpine's new plants will be sold in
long-term contracts to the state, according to company spokesman Bill
Highlander. But like other suppliers, he was vague about what it would charge
for the rest.

??"It kind of depends on a whole number of factors," Highlander said,
including
how much people conserve and how much power California can continue importing
from other states. Since no one can predict such things today, he added,
"that's
what makes it so difficult."

??If anyone should be concerned about the price of power it's the folks at
PG&E
Corp., who have blamed high electricity costs for forcing their utility --
Pacific Gas & Electric Co. -- into bankruptcy. But even they wouldn't
speculate
about how much they would charge for the power from their 1,048 megawatt plant
in Kern County, which is to be built by their unregulated affiliate, PG&E
National Energy Group. PG&E's energy trading arm is among the suppliers
accused
of questionable pricing practices, although PG&E officials have denied any
wrongdoing.

??By the time the Kern County plant is done in two years, "if we have a
situation where we are seeing a lot more generation come on line in the state,
economic law should dictate that prices will come down," said PG&E Corp.
spokesman Greg Pruett. But that's not for certain, he said, adding, "we've all
gone to school about how topsy-turvy the market could become."

??Like every other generator, PG&E doesn't plan to spend a lot of money
building a plant just to wind up giving away its electricity. "Obviously,"
Pruett said, "everyone who invests in these is doing so to earn a profit."

??-----

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

JOURNAL-CODE: SJ

LOAD-DATE: June 25, 2001

?????????????????????????????12 of 141 DOCUMENTS

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

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

?????????????????????JUNE 25, 2001, MONDAY, FINAL EDITION

SECTION: NEWS; Pg. A1

LENGTH: 720 words

HEADLINE: THE ENERGY CRUNCH;

$9 billion showdown over power;

State delegation seeking refunds

SOURCE: Chronicle Staff Writers

BYLINE: Lynda Gledhill, Christian Berthelsen

BODY:
A critical showdown in California's energy crisis starts this morning, as
state
officials meet with energy companies to demand $9 billion in refunds.

???A 15-day settlement conference, ordered as part of the Federal Energy
Regulatory Commission's decision last week to put price controls on wholesale
electricity prices, will bring together the parties that have been squabbling
for the past year.

???"We are going to Washington with one goal, and that is to bring back $9
billion," Gov. Gray Davis told reporters yesterday. "The fact is that people
have taken advantage of the market, gamed the system and ripped people off."

???But Davis' crusade may be dampened by challenges to the study the state
used
to arrive at the $9 billion figure and by a FERC mediator's prediction that
California will walk away with less than it is demanding.

???The Democratic governor's figure is based on an update of a March study by
the California Independent System Operator, which manages the sate's power
grid.
Some energy experts argue the study is flawed, but the ISO stood firm behind
its
methodology yesterday.

???Curtis L. Wagner Jr., the FERC administrative law judge who will oversee
the
meeting, said in an interview with The Chronicle yesterday that he was
optimistic a settlement would be reached.

???Wagner said the $9 billion "seems a little high. And the generators'
numbers
seem low. We'll probably come out somewhere in between."

???The veteran mediator, who spent yesterday reviewing spreadsheets submitted
by the parties, said he will look at applying last week's commission price
control order back to October.

???"I think we should put the refund issue to rest," Wagner said. "I'm sure we
can agree on a structure that is fair to everybody." Enron Corp, Reliant
Energy
Inc., Duke Energy Corp., Williams Cos., Dynegy Inc. and Mirant Corp. are among
the companies facing allegations of illegally overcharging California. The
companies say the high prices were a result of the high costs of natural gas
used to generate power.

???"There has been no evidence to suggest that suppliers bilked anyone," said
Mark Stultz, a vice president of the Electric Power Supply Association, which
represent the generators.

???But Davis insisted that the state will recover the full amount it is
asking.

???"Under the law, FERC has no discretion," he said. "It is mandated to refund
excessive charges, if prices were found to be unjust and unreasonable, which
they were."

???The governor, however, acknowledged that some of the money he is demanding
may be owed by municipal utilities that do not fall under FERC's jurisdiction.

???Davis adviser Nancy McFadden said municipal utilities such as Los Angeles
Department of Water and Power and BC Hydro that sold electricity to the state
have been invited to join the talks as well.

???"We need the FERC to lay the basis to seek refunds from private generators,
and use that as a basis to seek refunds from public generators," she said.

???California could face an obstacle in its case for the full repayment it
seeks. Under FERC rules, overcharges can only be authorized after a formal
investigation is ordered, which in this case started on Oct. 2, 2000. If
Wagner
sticks to that time frame, it eliminates the summer 2000 months when prices
first began to spike.

???"There is no question we can order refund from that (October) date
forward,"
Wagner said. "Legally, there may be some question before that date."

???But Wagner said a FERC regulations may not necessarily rule out broader
refunds. "That's the great thing about a settlement -- you can do anything,"
he
said.

???If no settlement is reached in 15 days, Wagner will forward his
recommendations to the full commission for its approval. California will then
have the option of pursuing the matter further in court.

???California's delegation will be led by Michael Kahn, a San Francisco lawyer
who chairs the ISO.

???Davis also meets today in Sacramento with new FERC Commissioners Patrick
Wood and Nora Brownell to discuss the refunds and the high cost of natural gas
in the state.

???Wood, who is expected to be named chairman of the commission in the fall,
has expressed his support for finding solutions to California's power
woes.E-mail the reporters at lgledhill@sfchronicle.com and
cberthelsen@sfchronicle.com.

LOAD-DATE: June 25, 2001

?????????????????????????????13 of 141 DOCUMENTS

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

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

?????????????????????JUNE 25, 2001, MONDAY, FINAL EDITION

SECTION: BUSINESS; Pg. B1

LENGTH: 1938 words

HEADLINE: BECHTEL HOLDS ITS OWN;

Despite economic downturn, S.F. construction giant's revenues remain steady

SOURCE: Chronicle Staff Writer

BYLINE: Todd Wallack

BODY:
The economy is skidding. Tech firms are shutting plants and reining in
expansion
plans. And two major engineering and construction firms, Stone & Webster and
Washington Group (formerly Morrison Knudsen) sought bankruptcy protection
during
the past 13 months.

???So, it would come as no surprise to hear that the world's largest
engineering and construction firm, San Francisco's Bechtel Group, is getting
pinched by the downturn.

???Only it isn't.

???Despite the slowdown in the economy and in some areas of construction,
Bechtel and many rivals are still busy upgrading cellular networks, building
railroads and airports, and completing new power plants.

???"Our guys are working 80 to 100 hours a week completing deals," said John
Siegel, vice president of marketing and strategy for Bechtel's power plant
construction division. "You walk around at 9 p.m. and everyone is still here."

???Overall, Bechtel's sales dipped 5 percent last year to $14.3 billion, but
that's still up 13 percent from 1999 and a healthy 74 percent from 1996. The
company said operating margins improved last year. And employment jumped by a
quarter during the past five years to 41,000 worldwide, including 1,300 in San
Francisco. Both employment and sales are holding firm so far this year. (The
privately held firm doesn't release earnings figures.)

???Bechtel isn't alone. Shares in Fluor, the second-largest engineering and
construction firm, and Jacobs Engineering Group nearly doubled in value during
the past 12 months. And some analysts are bullish on the future.

???"We could be on the front end of a multiyear up-cycle," Merrill Lynch
analyst Fritz von Carp predicts.

???CONTRARY CYCLES

???Although the engineering and construction industry has long been vulnerable
to sharp downturns, von Carp said the cycles often differ from the rest of the
U.S. economy.

???For instance, high energy prices usually spell bad news for most domestic
businesses. But an energy shortage could help spur a boom in new power plants,
refineries and pipelines -- lifting the petroleum sector out of a decade-old
funk. That has long been a major business for firms such as Bechtel.

???In addition, von Carp points out that government agencies typically garner
a
large share of transportation revenue from gasoline taxes -- which aren't as
sensitive to downturns as income taxes and capital gains. California and other
states have also increasingly walled off those funds, so politicians can't
raid
the transportation war chests to pay other bills when budgets are tight.

???Government agencies and big businesses also tend to initiate major projects
when times are good. But because the projects often take years to start and
complete, they often wind up ramping up after the economy has already slid
into
recession. "It is really a late cycle," von Carp said.

???This isn't to say that Bechtel's business is humming across the board.

???Bechtel Executive Vice President Jude Laspa said sales remain lackluster in
its mining and chemical division. (And despite von Carp's predictions of an
upswing in the petroleum industry, Laspa said sales haven't picked up so far.)

???"We have some very robust businesses, and some that are in a cyclical
downturn," Laspa said.

???TIGHT MARGINS

???Engineering and construction companies also have to be content with lower
profit margins than those in many other industries. Like its rivals, Bechtel
typically pockets about 3 to 5 percent of revenues after taxes, Laspa said.
Operating margins are closer to 7 to 9 percent. (By contrast, anything under
20
percent is considered anemic in the newspaper industry.)

???"This is a low-margin business," von Carp said.

???Industry players are also increasingly taking on more risk, bidding on
fixed-price contracts to compete. In the past, many firms charged by the hour
and profits soared when projects became mired in delays. Now that companies
are
getting only a lump sum for a development, major setbacks in a project or two
could sink a firm.

???Stone & Webster of Boston, for instance, filed for Chapter 11 bankruptcy
protection last year, largely because of delays in building a gas-fired power
plant in Tiverton, R.I. Shaw Group later acquired most of the firm's assets.

???Meanwhile, Washington Group of Boise, Idaho, foundered after it acquired
Raytheon's Engineers and Constructors unit, igniting a nasty court battle.
Washington accused Raytheon of concealing problems with several of the
projects
and demanded compensation; Raytheon blamed Washington for mismanaging the
projects and insisted it owed nothing.

???Although Bechtel doesn't let outsiders review its books, analysts say they
believe the firm has largely avoided such problems and is financially solid.
Bechtel executives point out that the company is 50 percent larger than its
next-biggest competitor.

???"Bechtel is considered in the industry to be the pre-eminent engineering
and
construction company," von Carp said. "It is a very good competitor with a
strong franchise in many markets."

???ON TOP IN TELECOM

???Bechtel has also enjoyed some luck lately.

???For instance, some telecommunications equipment firms are doing so poorly
that one analyst compared it to a "nuclear winter." Dozens of data service
providers, such as NorthPoint Communications in Emeryville, have shut down.
Others have severely reined in their expansion plans.

???But Bechtel's revenues are up 20 to 25 percent this year. George Conniff,
president of Bechtel's telecommunications and industrial business unit, said
his
firm mainly serves financially solid firms, such as AT&T Wireless, which are
still going ahead with plans to add 8,000 new towers, despite the slowdown. He
also said the unit has picked up some consulting business abandoned by
equipment
firms trying to narrow their focus to weather the downturn.

???"We're having a great year," Conniff said. "When the river is muddy, the
fish start to bite."

???But no part of the business is doing as well as Bechtel Power.

???A POWERHOUSE IN ENERGY

???"The power business is doing spectacular," von Carp said. "It is the
strongest part of the market now, bar none."

???Siegel said the company has 22 plants under construction worldwide -- up
from about nine four years ago -- and many more in the pipeline, particularly
in
the United States. Siegel said the unit's revenue rose 15 to 20 percent last
year and is on pace to match that this year. He said the firm could probably
land even more business if it had the ability to pursue and handle more
projects.

???Through another unit, Bechtel is also investing in power plants under
development in Hayward, Pittsburg and San Jose. The company struck a deal with
San Jose's Calpine in 1998 to spend $1 billion building several plants in the
Bay Area. Under the deal, the companies will jointly own the plants and split
the profits down the middle. Because of the strong demand for electricity in
California, Bechtel spokesman Jeff Leichtman said it will probably wind up
spending at least $500 million more than originally announced.

???Bechtel doesn't own any existing plants in the United States, so it isn't
among those accused of gouging consumers in the recent energy crisis. But
that's
partly an accident of fate.

???The firm's investment arm teamed with PG&E in the late '80s to start
building plants. But in 1996, PG&E offered to buy out Bechtel for most of the
U.S. operations; Bechtel sold the rest of its U.S. stakes shortly thereafter.

???But Bechtel kept the shares in its overseas plants and bought out PG&E a
year later. Bechtel now operates the foreign plants through a division called
Intergen. It also owns more than half of Nexant, an energy consulting firm
based
in San Francisco.

???Now, at a time when many Bay Area firms are being hurt by the energy
crisis,
Bechtel stands to cash in.

???And Laspa said word is already leaking out. He said the firm is getting
inundated by resumes. "Potential employees know where the business is strong,"
he said.

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

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

??BIG JOBS

???Bechtel has completed more than 20,000 projects and has 1,100 under way in
66 countries. Here are some notable landmarks Bechtel helped build:

???-- Completed

???Hoover Dam

???Bay Area Rapid Transit subway

???San Francisco Museum of Fine Arts building

???Bay Bridge

???Chunnel linking France to England

???Hong Kong International Airport .

???-- Current

???Boston Central Artery (Big Dig)

???AT&T Wireless (adding 8,000 cell sites)

???Korea High-Speed Rail, South Korea

???Antamina Copper and Zinc Mine, Peru

???Alcan Alma Smelter, Quebec

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

??CHART (1):

??BECHTEL AT A GLANCE
???Bechtel is the world's largest engineering and construction firm. Despite a

U.S. economic downturn, the San Francisco company's sales and employment

remain relatively healthy.
.
???Headquarters: San Francisco
???Local employment: 1,300 in San Francisco and 2,000 in California
???Founded: 1898
???Stock: Privately held
???CEO: Riley Bechtel
.
??-- Revenues

???Bechtel gets most of its revenue from building power plants and running

government facilities.
.
???Power ??????????????????????????????????????$3.1 billion
???Civil
???(bridges, tunnels, airports, etc.) ?????????$2.1 billion
???Petroleum and chemicals ????????????????????$1.5 billion
???Pipeline ???????????????????????????????????$1.2 billion
???Mining/metals ??????????????????????????????$1.7 billion
???Telecom ????????????????????????????????????$1.5 billion
???Bechtel National Inc.
???(Federal gov.t facilities management) ??????$3.1 billion
???Sources: Bechtel

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

CHART (2):

??BECHTEL LEADS THE PACK

??-- Construction/Engineering Firms
?Rank/Company/HQ ???????????????????????????????Revenue(x)

.
???1. Bechtel Group Inc., San Francisco ?????????$12.42
???2. Fluor Corp., Aliso Viejo (Orange County) ???$7.83
???3. Kellogg Brown & Root, Houston ??????????????$5.34
???4. The Turner Corp., Dallas ???????????????????$5.85
???5. CENTEX, Dallas ?????????????????????????????$5.4
???(x) - In billions; includes revenue from construction/engineering contracts

only.
?.

???-- Top Power Construction Firms
?Rank/Company ??????????????????????????????????Revenue(y)

??1. Bechtel Group Inc. ?????????????????????????$1,100
???2. Duke Engineering & Services ??????????????????$303
???3. Sargent & Lundy ??????????????????????????????$292
???4. Black & Veatch ???????????????????????????????$241
???5. Stone & Webster Engineers and Constructors ???$234
?(y) - In millions; Includes revenue from energy contracts only.
???.
Sources: Engineering News-Record

???E-mail Todd Wallack at twallack@sfchronicle.com.

GRAPHIC: PHOTO (3), CHART (2): SEE END OF TEXT, (1) Bechtel and Calpine
collaborated in the construction of Pittsburg's Delta Energy Center power
plant., (2) The Delta crew worked on the selective catalytic reduction system
that powers the generators. / Photos by Lance Iversen/The Chronicle, (3) The
Bay
Bridge is among many landmarks that have been Bechtel projects. / Darryl
Bush/The Chronicle

LOAD-DATE: June 25, 2001

?????????????????????????????15 of 141 DOCUMENTS

????????????????Copyright 2001 News World Communications, Inc.

?????????????????????????????The Washington Times

?????????????????????June 25, 2001, Monday, Final Edition

SECTION: PART A; COMMENTARY; Pg. A13

LENGTH: 917 words

HEADLINE: Price cap perils . . . and peripatetics

BYLINE: Donald Lambro; THE WASHINGTON TIMES

BODY:

??Republican Whip Tom DeLay couldn't believe what he was hearing at a House
Republican leadership meeting last week after the Federal Energy Regulatory
Commission voted to put into place stricter controls on Western electricity
prices.

??Almost all of the Republican leaders around the table, who were opposed to
price caps, were happy with FERC's decision because it pulled the political
rug
out from under the Democrats. ?"The mood around the table was positive. ?FERC
had robbed the Democrats of a big issue - that we were doing nothing to
control
higher energy prices for consumers," said a Republican House leadership
official
who attended the meeting.

??The independent regulatory agency's decision did what President Bush and
Republican leaders had publicly fought but were privately encouraging FERC to
do. ?While Republican leaders do not believe the price controls will alleviate
California's energy shortage, they were delighted by its immediate political
result. ?It pricked the price-cap balloon that had been rapidly growing on
Capitol Hill. ?Price-control Democrats, among them Sen. Dianne Feinstein of
California, have withdrawn their price-cap bills while they wait to see if the
agency's action will work.

??The administration, which said for months that price controls would only
exacerbate California's energy problems, was nevertheless happy to see the
Democratic offensive collapse. ?Under advice from political strategist Karl
Rove, Mr. ?Bush embraced FERC's action, maintaining that it did not impose
price
controls, although everyone knows that is exactly what it did.

??Mr. ?DeLay was not buying the party line, and said so. ?While he did not
directly criticize the White House's acquiescence - or its behind-the-scenes
lobbying for FERC's action - he put out a strong statement reminding his party
that price controls cannot and will not work.

??"Let's be clear," he said. ?"In every place they've been tried,
big-government price controls have failed to achieve the results their
supporters promised. ?They failed when Republicans used them. ?And they failed
when Democratic presidents used them. ?All government price controls can offer
is the specter of longer and more frequent blackouts."

??"The people of California are suffering today because the demand for
electricity exceeds the available supply. ?Until that fundamental imbalance is
resolved, their problems will continue," he said.

??Mr. ?Bush argued that FERC's order "was not talking about firm price
controls. ?. . . They're talking about a mechanism to mitigate any severe
price
spike that may occur, which is completely different from price controls."

??To which Wall Street economist and columnist Larry Kudlow replied, "Huh?
?You
can't be just a little bit pregnant. ?It's an administration endorsement of
the
FERC ruling. ?Maybe a soft endorsement, but an endorsement nonetheless."

??Energy Secretary Spencer Abraham's support for FERC's price-control action,
reported in my last column, sounded as if it were "right out of the old East
Bloc planning handbook before the Berlin Wall came down," Mr. Kudlow said in
his
column.

??Despite Mr. ?Bush's embrace of what the White House considers
"regulation-lite," there is widespread unanimity across the political spectrum
that energy price controls will fail.

??Listen to what economist Robert Litan of the liberal Brookings Institution
said about them: "Ninety-five percent of economists would say that price
controls are always dumb or that that there should be a very strong
presumption
against price controls. ?They lead to artificial scarcity and then perpetuate
it."

??Richard Nixon imposed price controls on oil in the 1970s to lower gas prices
at the pump, with disastrous results.

??The artificially low prices did not reduce consumption, they encouraged it.
They did not lead to more production and supply, they led to less. The price
ceilings "removed incentives for producers to increase supply through less
efficient and therefore more expensive means of production or by expanding
capacity through investment," said a Heritage Foundation memo explaining why
FERC's action won't solve California's energy problem.

??"History demonstrates that Nixon's centralized price and allocation
regulatory system led to long gas lines and other problems," the memo said.

??California's fundamental problem is that it has not built "the power plants
needed to supply California's energy-hungry economy," Mr. ?DeLay said in his
memo.

??What California needs is not more price controls, but a good dose of
deregulation. ?Texas and Pennsylvania, which deregulated their energy
industries, enjoy a plentiful supply of electric power. ?In fact, electricity
prices were already falling in California and around the country long before
FERC acted last week.

??What is needed in Washington right now is a refresher course on how free
markets work. ?Higher energy prices attract investment capital, and that leads
to more power plants, increased production, and, eventually, lower prices.
Price jumps also lead to less demand, which in turn promotes conservation. ?As
Mr. ?Kudlow put it, "Before long, market forces cause prices and profits to
retreat to more normal levels."

??"Government price controls fly in the face of the most basic laws of
economics," Tom DeLay told his colleagues. ?It looks as though we are about to
learn that lesson all over again.

??Donald Lambro is chief political correspondent for The Washington Times and
a
nationally syndicated columnist.

GRAPHIC: Cartoon, PRICE CAPS, By Benson/Arizona Republic (Tribune Media
Services, '01)

LOAD-DATE: June 25, 2001

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

??????????????????????June 24, 2001 Sunday ?Home Edition

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

LENGTH: 1061 words

HEADLINE: THE STATE / POLITICS;
Why Riordan Can't Be Governor

BYLINE: TONY QUINN, Tony Quinn is co-editor of the "California Target Book,"
an,
analysis of California legislative and congressional campaigns

DATELINE: SACRAMENTO

BODY:

??As L.A. Mayor Richard Riordan weighs a possible bid for the Republican
nomination for governor of California, he might ponder an unpleasant fact: had
the electorate he faced in 1993 been the same as the one in 2001, he probably
would have lost.

??California has undergone tremendous political change in the past eight
years,
a change driven by demographic shifts evident in the 2000 census. In 1993, for
example, 72% of the L.A. electorate was white, 22% black and Latino. In 2001,
only 52% is white, while 39% is black and Latino.

??Virtually all the demographic change in the statewide electorate has worked
to the disadvantage of California Republicans. Much is written about the rise
of
Latino voters. Equally important--and less noted--is the change within that
electorate. When it was smaller, Republicans could, as Riordan did in 1993,
capture about 40% of the Latino vote. Latino voters tended to be more middle
class; many were second-and third-generation Californians.

??The 1986 federal immigration act legalized some 1 million Latino immigrants
here, who over the years have become citizens and voters. They are younger,
more
blue collar, more pro-union and much more loyally Democratic. While
Republicans
can still attract older Latinos, these are new voters, and it will be a while
before the GOP can win them over.

??The same thing has happened with white voters, who have declined as a
percentage of California's electorate in each of the past few election
cycles. A
white electorate made up of aerospace workers and their families--solid
Republicans--has been replaced by one composed of high-tech entrepreneurs,
software designers and entertainment-industry employees: culturally liberal
and
open to voting Democratic.

??Since 1996, state Republicans have agonized over what to do about the
unfavorable demographic shifts, as each election cycle has proved worse than
the
last. Now the Bush administration has decided their fate for them. By all
evidence, a high-level decision has been made that California is to be cut
adrift, that state Republicans cannot be saved.

??The most obvious piece of evidence is the administration's energy approach.
Until prodded by frightened House Republicans into accepting some price
controls, the Bush administration seemed to think that California could boil
in
the dark this summer. Its ham-handed approach has largely denied Republicans
the
partisan advantage they might have expected from the Democrats' handling of
the
mess.

??The coup de grace for California Republicans is a less publicized Bush
policy, one that potentially has longer and more dramatic political
consequences. That is the decision to force California to use ethanol as a
gasoline additive, which is sure to increase already-high prices at the pump.
The administration refused a waiver request from Gov. Gray Davis, supported by
the oil companies, to exempt the state from ethanol because the additive is
not
necessary to meet clean-air standards and because it costs too much.

??The administration's ethanol decision runs counter to the states' rights
philosophy so admired by Bush (can anyone believe the president would have
refused a federal waiver request from Texas?), but it makes good short-term
politics. Ethanol is made from corn, and three of the hottest U.S. Senate
races
next year will take place in the corn-growing states of Iowa, Missouri and
Minnesota.

??Additionally, the presidential race in all three states was close. Bush will
try mightily to carry Iowa and Minnesota in 2004, and to repeat his win in
Missouri. Critical to Republican chances in these states is a heavy GOP vote
in
rural areas. That means corn, and the politics of corn mean adding ethanol to
gasoline sold in California.

??This decision may have a greater political impact within California than the
energy crisis because, unlike high electricity prices that hit only part of
the
state, higher gasoline prices affect what it means, in part, to be a
Californian: driving an automobile. The political ads almost write themselves:
"Bush raises your gas prices as payoff to Iowa farmers." The ethanol decision
is
a federally imposed gas-tax increase, the very thing Republicans are supposed
to
be against.

??The administration should take care, though, that its apparent
anti-California campaign doesn't go too far. Although the GOP lost four
California House seats last year, 20 Republicans still serve in the lower
chamber. At least eight of them could lose their seats in 2002 if national
Republicans keep up the California-be-damned drumbeat.

??Democrat Al Gore carried three of the 20 GOP-held districts in the 2000
presidential election. Gore plus Green candidate Ralph Nader ran virtually
even
with Bush in another three districts. Redistricting, under the complete
control
of Democrats, could weaken additional GOP incumbents.

??There is a precedent for the danger that national Republcians may be
courting. In governing, Bush and Cheney have played to their conservative base
just as former President Bill Clinton, Gore and Hillary Rodham Clinton
pandered
to their liberal base in the first two years of their administration. The
Clinton administration's ultra-liberalism cost Democrats both houses of
Congress
in 1994, and decimated the party in several solidly Democratic Southern
states.

??Republicans won three Democratic House seats in Georgia in 1994, and took
another through a party switch. Since 1994, no white Democrat has represented
Georgia in the House. In Kentucky, the GOP knocked off two of the state's four
Democrats; in Gore's Tennessee, Republicans took both U.S. Senate seats from
the
Democrats and gained two House seats. In North Carolina, they won four
Democratic House seats.

??In just these four Southern and border states, whose combined congressional
delegations total less than California's 53 districts in 2002, Republicans won
12 Democratic House seats when the voters turned against Clinton in 1994. Like
California, these states had drifted away from longstanding political
moorings,
and 1994 was the catalyst for the final break. Bad as the past three election
cycles have been for California Republicans, 2002 could be worse.

??If these political trends continue in California, and the Bush
administration
sticks with its energy policy, it might be said of Riordan's quest for
governor,
why bother?

GRAPHIC: PHOTO: President George W. Bush's energy policies won't help Mayor
Richard Riordan, left, become California's new governor. PHOTOGRAPHER:
Associated Press

LOAD-DATE: June 24, 2001

?????????????????????????????27 of 141 DOCUMENTS

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

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

??????????????????????June 24, 2001 Sunday ?Home Edition

SECTION: Opinion; Part M; Page 4; Op Ed Desk

LENGTH: 408 words

HEADLINE: Contradictions in State's Energy Plan

BODY:

??Somebody explain to me (and to the Democrats in Sacramento) what is going on
with the state's power crisis. Recently, the Federal Energy Regulatory
Commission announced caps on wholesale electricity prices in a number of
Western
states, including California (June 19). Big deal. Has Gov. Gray Davis not
already locked California into several years' worth of energy purchases at
above-market wholesale prices? (Davis touted this plan a few weeks ago.) If
so,
how does a newly imposed price cap affect the rates that the state has already
obligated itself to pay?

??Now Davis and his fellow Democrat, state Treasurer Phil Angelides, proclaim
that they are saving taxpayers by approving a $5-billion loan, to be
supplemented later on by a $12.5-billion bond issue ("State to Pay Electric
Bill
With Loan, Not Taxes," June 20). Instead of simply subsidizing energy
purchases,
California taxpayers can look forward to paying for those same purchases, plus
interest on borrowings and bond issues! Only Democrats would characterize that
as salvation.

??Michael J. Allegretti

???o7 Northridge

??*

???f7 In "Energy on Agenda, but Issue Is Blame" (news analysis, June 20),
Ronald Brownstein reports that Gov. Davis wants to lay the blame for his
energy
crisis on President Bush.

??Last January I was in a shopping mall picking up a tuxedo to wear to Bush's
inauguration. Over the PA system came an announcement warning of an impending
blackout. How's Davis going to blame Bush for something Davis accomplished
himself by refusing to act when advised of the problem in 1999, before Bush
even
became a presidential candidate, much less president?

??Bruce Crawford

???o7 Fountain Valley

??*

???f7 Well, I'm through conserving. My air conditioner is back on and I'm not
shutting down my three computers anymore.

??Why, you ask? Because foolish writers and scared politicians have removed
the
only reason for me to conserve. And if you think I'm so stupid as to believe
that price caps are going to solve anything, guess again. What I do believe is
that if I don't start using more power, the result of the price caps will be
to
penalize me based on prior use of electricity. So, power up, I say, since I
have
to create a history of waste before I can be rewarded by the politicians.

??Eric Taylor

???o7 Sunland

??*

???f7 Definition of a power crisis: When greed comes face to face with
stupidity.

??Harry Levin

???o7 Woodland Hills

???f7

LOAD-DATE: June 24, 2001

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

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

??????????????????????June 24, 2001 Sunday ?Home Edition

SECTION: Opinion; Part M; Page 4; Op Ed Desk

LENGTH: 557 words

HEADLINE: Life After the Crisis

BODY:

??For six months, Californians have been riding an energy crisis that is like
some movie monster--a weird, hard-to-comprehend creature that morphs and
fragments day by day.

??Now, finally, the state is gaining a measure of control. The threat of
near-constant rolling blackouts through the summer is fading, though not gone,
and Washington has halfheartedly come to the rescue. What's still needed is a
long-term plan, a way to turn this monstrous puzzle into a coherent whole.

??As Chairwoman Debra Bowen (D-Marina del Rey) of the state Senate's Energy
Committee said, "What do we want this beast to look like? We've got to have
pieces that fit together."

??What California will have by the end of this year is a ragged mosaic of
emergency edicts from Gov. Gray Davis, lots of hasty legislative action and a
multibillion-dollar debt from turning the state into the chief power
purchaser.
Consumers already are paying higher electricity bills--much higher ones for
those who don't conserve. There is constant action in the federal Bankruptcy
Court and the acronymic stew of state and federal agencies.

??The experience is unique in California history and might be likened to
Franklin D. Roosevelt's First 100 Days effort to battle the Depression. Need
more money? State Treasurer Phil Angelides goes to Wall Street and borrows
$3.5
billion. Need more power? The Legislature creates a California Power Authority
to build the state's own plants if necessary.

??The crisis atmosphere eased last week, due in part to stronger federal
controls over wholesale power rates. Prices moderated. More plants were back
on
line. The weather was hot, but no blackouts followed. The state finally
released
details of its $43 billion in long-term energy contracts. Angelides' loan will
help end the bleeding of the state's general fund for power purchases. And
FERC
promised to vigorously pursue refunds from the giant power companies that
grossly overcharged California this past year. It's about time.

??Soon, payment of back debt will have to be apportioned. First, what
percentage should be paid? Generators should be prepared to accept less than
100%. After that, taxpayers, utility customers and the utilities' parent
companies may have to shoulder more burden. That will be unpleasant.

??Then what? Bowen plans to hold a hearing soon on "What should California's
electricity marketplace look like?" Topics that need to be covered include the
future role of the utilities, improving natural gas supplies to the state and
restoring suspended environmental controls. The state should aggressively
increase alternative and renewable energy. It also needs to decide whether
there
is any advantage in taking over the transmission grid and to figure out the
best
way to get itself out of the power-buying business.

??There can be no return to the old regulated system since most of the
utilities' old power plants are now owned by private generators. The
disastrous
1996 deregulation has already been largely undone. We know from the state's
hard
experience that electric power is too critical to be trusted entirely to the
free market. What is not clear yet is how much regulatory control is needed
and
who should supply it. There will be no easy answers, but if we define the
right
questions, the beastly puzzle will start to make sense.

LOAD-DATE: June 24, 2001

?????????????????????????????32 of 141 DOCUMENTS

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

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

??????????????????June 24, 2001, Sunday METRO FINAL EDITION

SECTION: MAIN NEWS; Pg. A19; NEWS FOCUS An in-depth look at issues or people
in
the news

LENGTH: 1393 words

HEADLINE: Bush's energy chief confronts the spotlight Spencer Abraham finds
himself in the hot seat as he helps pitch the president's power plan.

BYLINE: James Rosen Bee Washington Bureau

DATELINE: WASHINGTON

BODY:

??Energy Secretary Spencer Abraham, a publicity-shy intellectual who jokes
that
he has "a face made for radio," finds himself in the unlikely role of lead
pitchman for President Bush's energy plan.

??As Abraham, 49, tries to solve the California energy crisis and prevent it
from spreading to other regions, few Cabinet members have been as suddenly and
relentlessly cast in the spotlight.

??The grandson of Lebanese immigrants who was defeated in his Senate
re-election bid last fall, Abraham knew his new job would put him in the hot
seat. Yet he is still amazed by the dozens of TV talk shows, speeches,
congressional hearings and news conferences on his schedule in recent weeks.

??"I certainly didn't anticipate being this frequently on national television
talk shows and things of that sort," Abraham said in an interview in his
office
at the mammoth Department of Energy headquarters.

??"That's surprised me a fair amount because typically energy secretaries have
not played that kind of visible role. But I knew the issues were going to be
at
center stage."

??President Bush guaranteed that Abraham's post would be high profile when he
set up, within days of taking office Jan. 20, an energy task force, put Vice
President Dick Cheney in charge, and asked it to develop a comprehensive plan
for meeting the country's power needs.

??Participants say Abraham played a leading role in the panel's work, often
leading its closed-door meetings and helping translate all the techno-talk
into
normal language.

??Now that the task force has issued a report with 105
recommendations, Abraham's job is to implement some of them within his
department and persuade Congress to implement others through legislation.

??Abraham's work on Capitol Hill, in turn, requires the Michigan native to
turn
up the political heat by asking Americans to back the administration's case
for
sharply increased energy production and as many as 1,900 new power plants over
the next two decades.

??After the energy plan drew criticism for its focus on supply and its call
for
oil and gas exploration in environmentally sensitive areas, Abraham also must
try to convince Americans that Bush and Cheney, two former oil executives,
really do care about conservation and fuel efficiency.

??It's a tough challenge for Abraham, a fierce auto-industry ally who
challenged attempts to increase vehicle fuel-efficiency requirements when he
represented Michigan in the Senate from 1995 through 2000.

??Abraham denies numerous reports that he, Bush and Cheney are stressing
conservation and environmental protection only because of political pressure
and
falling poll numbers for the president.

??"The plan is very much supportive of a diverse set of energy sources,"
Abraham said. "What the media wishes to argue the plan says - based on, as far
as I can tell, limited study of it - is different than what we've said."

??Abraham also rejects claims, most prominently from California Gov. Gray
Davis
and other Democrats, that the Bush administration has turned a deaf ear to
Californians' cries for energy price relief.

??The administration, Abraham says, has given Davis everything he wants - from
expediting new generator permits to authorizing consumer rebates - except for
wholesale electricity price controls. For that, Abraham is unapologetic.

??"We don't want to see high prices," Abraham said. "But we think that to take
actions that would make blackouts more severe is not a wise response to high
prices. The price problem is a function of too much demand and too little
supply. Price caps will, if anything, work to increase demand and decrease
supply. They will make the blackouts worse."

??Nevertheless, the Federal Energy Regulatory Commission, with two new members
appointed by Bush, last week approved limited price controls on electricity
prices in California and 10 other Western states.

??Longtime associates of Abraham say he is comfortable being Bush's advocate
because their political philosophies are so similar.

??Abraham's free-market, conservative roots run deep. At Harvard Law School in
the 1970s, he started a conservative law journal to counter what he saw as the
liberal bias of a half-dozen publications tied to the school. When the school
refused to fund his journal, Abraham obtained private funding; it is now among
the country's most widely cited law journals.

??And after graduating from law school, Abraham helped found the Federalist
Society, which became an influential hub of conservative thought.

??While Abraham may be an unlikely choice for the public-relations part of his
job, few people bring more intellectual firepower to the mind-numbing
complexities of energy policy, with its focus on power grids, BTUs and
photovoltaic cells.

??Virtually every conversation about Abraham begins on the same note: He is,
supporters and even detractors agree, flat-out brilliant.

??"He is one of the brightest people I've ever met," said Republican Sen.
Chuck
Hagel of Nebraska.

??Abraham's friends and family members describe him as a voracious reader with
a phenomenal memory, a vacuum-like grasp of details, and a huge appetite for
both work and Italian food. He fights a constant battle of the bulge, going on
yo-yo diets, and strums out folk songs on the guitar.

??Cesar Condo, now a domestic adviser to Cheney, was Abraham's Senate
legislative director. Abraham was virtually alone among senators, Condo said,
in
reading every word of the bills he introduced, dissecting them like term
papers
and demanding perfect legislative language.

??Despite his public diffidence, Abraham's friends say he has a quick, often
self-deprecating wit and is a first-rate mimic. In the Senate, Hagel said, he
did hilarious imitations of his colleagues, usually in their presence.

??Abraham's father worked on an assembly line at the Oldsmobile factory in
Lansing, Mich., while his mother owned a dress shop.

??Friends say his middle-class roots show in Abraham's unassuming nature. His
idea of a good time is accompanying his wife, Jane, and their three children -
twins Julie and Betsy, 7, and Spencer, 4 - to the Pentagon City Mall near
their
home in suburban Virginia. He loves playing putt-putt golf and going to
batting
cages.

??But not everyone back home in Michigan is enthralled by Abraham. One of his
critics is William Ballenger, a former Republican legislator who now edits the
"Inside Michigan Politics" newsletter.

??Ballenger views Abraham as a longtime GOP operative who has relied on
powerful patrons such as Michigan Gov. John Engler and former Vice President
Dan
Quayle - for whom he worked as deputy chief of staff - to rise in politics. He
gained election to the Senate, Ballenger believes, on Engler's coattails in
the
national Republican landslide of 1994.

??"Abraham didn't relate to constituents well," Ballenger said. "He is an
introverted, passive personality. He doesn't engage people in an effective
way.
He just doesn't connect well with rank-and-file voters. In my view, he's not
the
best person to be out there explaining national energy policy to Americans."

??Despite his longtime service in the Republican trenches - starting with his
election, in 1983, as the country's youngest state party chairman - Abraham
sometimes flashed a stubborn independent streak in the Senate.

??Within days of taking office in 1995, he was one of two Republicans to vote
for an outright ban on gifts to lawmakers. And in the next few years, he stood
up to the party's leadership in defeating attempts to restrict legal
immigration
to the United States.

??Abraham repeatedly told his fellow senators that the United States would be
abandoning its finest heritage if it closed its gates to foreigners.

??That prominent stance contributed to his re-election defeat last year, as
unions and anti-immigration groups teamed up to run political ads accusing him
of stealing jobs from American workers.

??Abraham recalled his own ethnic roots in his final Senate speech last
December.

??"I know when my grandparents came here, they never dreamt that their
grandson
or anyone in their family would end up as a member of the U.S. Senate," he
said.

??"But they came to America because they wanted to live in a place in which
something such as that could happen. ... It is the greatest thing about
America."

??* * *

??The Bee's James Rosen can be reached at (202) 383-0014 or
jrosen@mcclatchydc.com.

GRAPHIC: Associated Press file / Tony Tribble Although Energy Secretary
Spencer
Abraham is surprised his job has been so high profile, "I knew the issues were
going to be at center stage." He denies claims the Bush administration has
stressed conservation only because of political pressure and that it has
ignored
California's calls for energy price relief.

LOAD-DATE: June 25, 2001

?????????????????????????????33 of 141 DOCUMENTS

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

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

?????????????????????JUNE 24, 2001, SUNDAY, FINAL EDITION

SECTION: NEWS; Pg. A21

LENGTH: 1056 words

HEADLINE: ENERGY CRUNCH;

Direct access falls victim to crisis;

Power-buying plan's future is in doubt

SOURCE: Chronicle Staff Writers

BYLINE: Bernadette Tansey, Greg Lucas

BODY:
The option to shop around for the best deal on electricity -- one of the
cornerstones of California's deregulation plan -- could soon be scrapped.

???Businesses may lose the right to cut their own deals with private power
suppliers, and environmentally conscious consumers could be barred from
shifting
their business from utilities to renewable energy firms, unless the
Legislature
acts quickly to save the program.

???The potential cost savings of so-called direct access to competing
electricity providers was the plum that incited big businesses to fight hard
for
deregulation in 1996. But the program -- although it was not responsible for
the
soaring rates that piled up state and utility debt -- may be sacrificed in the
state's drive to recoup its costs.

???The fate of the program was thrown into doubt last winter, when
skyrocketing
wholesale electricity costs collapsed the nascent direct access market,
weakened
the utilities and caused the state to take over power purchases.

???Industry has been lobbying hard since then to keep the option open for the
future. But the problem for Gov. Gray Davis' administration is that the state
needs big industrial consumers to stay on as utility customers to help pay off
the $8 billion it has already spent buying power and the estimated $43 billion
worth of power it has contracted to buy over the next 20 years.

???Otherwise, the utility customers left behind -- householders and small
businesses -- will be stuck with the whole bill.

???Competing proposals to allow companies to bail out by paying an "exit fee"
to cover a share of the cost are working their way through the Legislature.

???But time is running short, state Treasurer Philip Angelides warned the
Legislature and the state Public Utilities Commission this month.

???The state plans to issue $12.5 billion in bonds in September for power
purchases, and officials say underwriters want to to be assured that there is
a
large enough revenue stream to repay the bonds.

???Angelides and other state officials urged the Legislature and the PUC to
decide by the end of June either to ban direct access or lock in a procedure
to
charge each departing company for its share of the state power costs.

???"The hypothetical and theoretical desires for a direct access market and
the
hypothetical and theoretical desire for a bond sale are now intersecting in
reality," said Assemblyman Fred Keeley, D-Boulder Creek (Santa Cruz County).

???Industry advocates agree that firms should pay a fair share of the
electricity purchased on their behalf. But how much -- and how to make that
calculation -- is a complex issue they fear will be decided in haste, said
Dorothy Rothrock, a lobbyist for the California Manufacturers and Technology
Association.

???"We are reacting to crises, real or man-made, and making decisions in a
rush
without considering the consequences," Rothrock said.

???The PUC is set to vote Thursday on a proposed urgency measure to suspend
direct access as of July 1. The ban recommended by a PUC administrative law
judge would continue as long as the state functions as power buyer for utility
customers -- conceivably through the term of state contracts ending in 2020.

???Lawmakers had authorized the PUC to suspend direct access last winter when
the state took over electricity purchasing. But a divided PUC delayed action
as
legislators worked with industry to salvage the program.

???Although direct access contracts are still legal until the PUC acts, in
effect the program was slammed into suspension by the brutal power price hikes
of the past 18 months. Threatened by exposure to rising wholesale electricity
rates, virtually all direct access customers have returned to the utilities,
where they are protected by the state rate freeze.

???Even though the right to deal directly with generators has been on the
books
since 1996, few businesses or householders actually did it.

???Many of the residential customers who signed on with alternative suppliers
did so to support the growth of renewable power like solar and wind energy. At
its peak, the program drew about 224,000 households -- about 2.5 percent of
the
customer base of California's major utilities. About 13 percent of the
industrial market contracted for their own power.

???Industry has until tomorrow to file plans with the PUC to preserve direct
access under a proposal by public utilities Commissioner Richard Bilas, a
strong
supporter of the program.

???Commissioner Jeff Brown said he favors direct access, but the continuing
uncertainty over the form it would take jeopardizes the state's ability to
float
its bonds.

???Commissioner Carl Wood, a direct access opponent, said it should be
abolished, because it creates a danger that residential and small business
customers will be stuck paying for relatively high-cost contracts secured by
the
state during the energy crisis, while large industries would be free to buy
cheap power from the newer, more efficient plants that will be coming online
in
the next few years.

???But Wood said even if the PUC suspends the option, the state Legislature
could order its reinstatement.

???Sen. Debra Bowen, D-Marina del Rey, is carrying a bill to do that while
requiring the exit fees demanded by Angelides and state finance officials.

???Without those safeguards, utility revenues would dive into a "death
spiral,"
where rates would keep rising as more companies abandoned the system, Bowen
said, giving the remaining customers a deeper incentive to bail.

???State legislators are set to meet this week to start deciding how
California's electricity market should be structured in the future. But
deadlines to deal with the state's financial hangover are pushing decisions on
direct access.

???Bowen said it's unlikely her bill will be passed within a few weeks, the
time frame Davis administration officials have urged to give certainty to the
terms of the bond deal.

???Angelides said the Legislature could still pass a law reviving direct
access
before the bond language is written in July. But after that, the Legislature
cannot pass laws that change the terms of contract commitments made by the
state, he said.

???"There is still a window to act here, but they have to act fast," Angelides
said.E-mail Bernadette Tansey at btansey@sfchronicle.com and Greg Lucas at
glucas@sfchronicle.com.

LOAD-DATE: June 24, 2001

?????????????????????????????38 of 141 DOCUMENTS

????????????????Copyright 2001 News World Communications, Inc.

?????????????????????????????The Washington Times

?????????????????????June 24, 2001, Sunday, Final Edition

SECTION: PART B; COMMENTARY; FORUM; Pg. B5

LENGTH: 907 words

HEADLINE: Girding for a cooperative grid

BYLINE: Glenn English

BODY:

??In the weeks since President George Bush accepted the 163-page report of the
National Energy Policy Development Group and unveiled his vision for a
national
energy policy, the administration has been both praised and pilloried by
interest groups, politicians and media pundits, seeking to influence the
debate
and set the agenda.

??Changes are contemplated that will forever alter the relationship that
electric utilities have with their consumers. ?The stakes are especially high
for consumer-owned electric cooperatives.

??American consumers have historically depended upon integrated utilities to
generate, transmit and distribute the power they need to light their houses
and
run their businesses. ?In exchange for reliable, affordable service electric
utilities were granted a monopoly service territory and guaranteed rates of
return. ?That relationship is changing; for those in California and the
Pacific
Northwest, reliability and affordability are just fond memories.

??Deregulation or, more appropriately, restructuring of the electric industry
has been under way for more than two decades. ?In 1978, The Public Utilities
Regulatory Policies Act (PURPA) encouraged the development of independent
power
plants with no retail consumer base. ?Developed outside the integrated utility
system, these "merchant" plants have no obligation to serve retail customers.
They are free to enter into wholesale, market-rate contracts with whomever
they
choose.

??So began the separation of big power companies from their customers. Twenty
years ago, electric utilities built only the power plants they needed to serve
their local customers, linking those facilities to their local power lines
with
a high-voltage transmission grid.

??Known as the world's largest machine, the grids were engineered to move
power
from the generation plant to the local customer as efficiently as possible.
?The
limited interconnections between the many independent grids served primarily
as
emergency paths over which electricity could flow in the event that a
neighboring utility experienced an outage.

??The merchant generators soon sought to create regional markets for their
power. ?That meant they had to transmit power from grid to grid using the
patchwork of interconnections designed solely for local reliability. For the
past 10 years, the federal government has tried to design rules that would
create a robust market for bulk power across that limited grid. In essence, we
have been trying to move fleets of tractor-trailers over state roads rather
then
interstate highways.

??We are asking more of the system then it is able to deliver. ?It is time
that
we as consumers demand that the nation's electrical infrastructure be retooled
to meet the requirements of the 21st century. The president's energy policy
directs the energy secretary to examine the benefits of establishing a
national
transmission grid. ?A national grid free of constraints and bottlenecks and
immune to the exercise of market power is imperative if we are to have a truly
competitive energy market.

??The president's energy plan recognizes the need for a transmission system
capable of moving large quantities of power throughout the nation, much like
the
interstate highway system. ?In fact such a national grid should be built in
much
the same fashion as the highways, with local ownership, but meeting federal
standards and operating under federal rules.

??c Electric utilities should work directly with joint planning groups in
their
Regional Transmission Organizations (RTOs) to determine what upgrades are
needed
to create the highway and those organizations should be empowered by the
Federal
Energy Regulatory Commission (FERC) to operate the grid, managing all
transmission assets that make up the national grid.

??c New construction and upgrades to the national grid must be approved by the
RTOs responsible for reliability.

??c In order to maximize the efficient movement of wholesale power and
minimize
costs to consumers, government policy should enable construction of new
transmission by reducing the financial risk, not by allowing monopoly profits.

??c Transmission owners should agree to receive cost-of-service rates set by
FERC ensuring them reasonable return on their capital.

??The energy secretary has before him an incredible opportunity and
responsibility. ?I urge him to take a fresh approach: develop a plan that
enables anyone to build regionally approved transmission lines that enhance
the
national grid, keeps transmission priced at low cost- of-service rates with a
reasonable return on investment, and ensures that transmission is built and
operated for the benefit of consumers.

??The grid should exist to enhance the competitive generation market not to
balkanize it further. ?Any approach that allows individual companies with a
financial interest in the energy market to control transmission would have the
unwelcome effect of tollgates on the interstate system: narrowing markets,
interfering with free trade, and raising the cost of electricity to consumers
across the nation.

??A truly open and accessible national power grid would be a strong foundation
upon which to build a competitive wholesale market. ?The development of such a
system would help realize the president's vision for "reliable, affordable and
environmentally sound energy for America's future."

??Chief executive officer, the National Rural Electric Cooperative
Association.

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????????????????????Copyright 2001 Chicago Tribune Company

???????????????????????????????Chicago Tribune

??????????????????June 24, 2001 Sunday, CHICAGOLAND EDITION

SECTION: News; Pg. 10; ZONE: C; ACROSS THE NATION.

LENGTH: 263 words

HEADLINE: Power plant whistleblowers allege production sabotage

BYLINE: Items compiled from Tribune news services.

DATELINE: SACRAMENTO, CALIFORNIA

BODY:

??Former workers at Duke Energy's South Bay power plant on Friday accused the
company of shutting down production units to drive up electricity prices.

??Duke officials said the claim was "baseless."

??The former workers told the state Senate Select Committee to Investigate
Price Manipulation that officials at the San Diego-area plant ordered power
units off-line for apparently unnecessary maintenance, destroyed parts that
were
needed for repairs and manipulated the electricity it was feeding the
statewide
grid.

??"This is the first smoking gun that's appeared -- whistleblowers," said Lt.
Gov. Cruz Bustamante, who attended the hearings. "That is called market
manipulation, and that, in effect, ended up costing the ratepayers of
California
billions of dollars."

??State legislators, regulators and prosecutors are investigating whether
power
generators illegally manipulated the power supply to drive prices to record
levels, forcing the state to buy more than $8 billion worth of electricity
since
January for the state's three investor-owned utilities.

??All three longtime San Diego Gas & Electric employees -- mechanics Glenn
Johnson and Ed Edwards and assistant control room operator Jimmy Olkjer --
were
laid off in April when Charlotte-based Duke completed its two-year acquisition
of the former SDG&E plant in Chula Vista.

??Duke officials said the plant's performance belies the workers' accusations.
They said Duke's four California plants produced 50 percent more electricity
last year than in 1999 and are on a pace to improve that performance this
year.

LOAD-DATE: June 24, 2001