Message-ID: <24509319.1075842948701.JavaMail.evans@thyme> Date: Thu, 3 Aug 2000 20:48:00 -0700 (PDT) From: foothi19@idt.net To: charlotte@wptf.org Subject: [Second Delivery: WPTF Friday Amen Burrito] Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: quoted-printable X-From: Gary Ackerman X-To: webmaster X-cc: X-bcc: X-Folder: \Jeff_Dasovich_Dec2000\Notes Folders\All documents X-Origin: DASOVICH-J X-FileName: jdasovic.nsf Sorry about this gang, but my new computer messed up the e-mail list. It's 4 am and I think I have fixed it. Maybe. Bear with me if you are getting this for the second time this morning. gba X-Mozilla-Status2: 00000000 Message-ID: <398A81DA.E883D290@idt.net> Date: Fri, 04 Aug 2000 01:42:26 -0700 From: Gary Ackerman Reply-To: foothi19@idt.net Organization: Foothill Services X-Mailer: Mozilla 4.74C-CCK-MCD {C-UDP; EBM-APPLE} (Macintosh; U; PPC) MIME-Version: 1.0 To: webmaster Subject: WPTF Friday Amen Burrito Content-Type: multipart/alternative;=20 boundary=3D"------------5CA857B6E2003A3BEF3A907F" ?=20 THE FRIDAY BURRITO=20 "...more fun than a fortune cookie, and at least as accurate."=20 Everyone is getting into the act.? When I started this gig, I was the only= =20 guy in town writing to folks like you about the power industry in=20 California.? I wrote about what=01,s new, what=01,s happening, and all the= =20 important stuff.? This week, Governor Gray Davis decided to write his own= =20 Burrito.? His epistle got more press than mine, but why is he muscling in o= n=20 my turf?? Not to be outdone, PUC President Loretta Lynch released a report= =20 which looks into every facet of California=01,s power business.? No stone l= eft=20 unturned. I=01,m telling you, there isn=01,t enough room in this business f= or all=20 of us.? They need to clear out.=20 With people like Herr (Hair?) Peace, Governor I=01,m-Not Mr.-Rogers Davis a= nd=20 Let=01,s Do Lynch, who needs a Friday Burrito?? They re-define our reality = each=20 week with mind-numbing aplomb.? For example, starting in early June, the PX= =20 was ordered to compete for business against other Qualified Trading=20 Vehicles.? Then, two weeks later, the Energy F_hrer legislated that idea to= =20 an early death which kept the status quo for at least one year.? This week= =20 the PUC approved 5-year bilateral deals for PG&E and SCE, thereby opening t= he=20 PX to competition, and emasculating the PX=01,s Block Forward Market. Zip, = bam,=20 boom.=20 I can=01,t wait to see what next week will bring.? I hear Senator Bowen is= =20 holding Committee hearings on re regulating the industry, and the Governor= =01,s=20 new Energy Security Council will meet to decide six things:=20 What=01,s for lunch?=20 Who will sit at the head of the table?=20 Does anyone have good seats for next week=01,s Democratic convention?=20 Is there anyone we haven=01,t indicted yet in the power industry?=20 Who will crank up the air conditioning in this room?? It=01,s getting too w= arm.=20 Then, they will collect data from innocent businesses under subpoena, ignor= e=20 the facts, and publish a report.? It makes one want to take a deep breath,= =20 and inhale the scented fumes of democracy.=20 You know, I can=01,t think about where to begin, so let=01,s start somewher= e.=20 Things on the Island of California=20 ?@@@ Is there anyone left at SDG&E with a brain?=20 ?@@@ The PUC issues its scathing report=20 ?@@@ The ISO invokes $250 price caps.? Duh!=20 Things at the throne of FERC=20 ?@@@ Amen for the Morgan Stanley Order=20 Odds and Ends (_!_)=20 Things on the Island of California=20 ?@@@ Is there anyone left at SDG&E with a brain?=20 Well, the answer very clearly is no.? I have been astounded by repeated=20 attempts of SDG&E=01,s most senior people to ape humans, but instead they m= imic=20 apes.=20 Consider the following.? First, they waltz their default customers into the= =20 summer with little of no protection from price spikes in the wholesale=20 market.? Forgivable in that it is human to err.? The prices skyrocket in=20 June, and they start looking for who to blame.? =01&Must be them damn=20 independent generators,=018 say their managers.? Gary Cotton informs the IS= O=20 Governing Board that hedging SDG&E=01,s position in the Block Forward Marke= t=20 wouldn=01,t have made any difference.? There=01,s one nobel laureate who mi= ssed his=20 prime.=20 Next, under pressure, they ask for help from suppliers and anyone else who= =20 will assist the utility and their customers.? Nine offers show up at their= =20 table, and they can=01,t choose any of them.? Again, Mr Cotton tells his fe= llow=20 ISO Governing Board members that these things take time, and we don=01,t to= rush=20 since there are many legislative barriers, and, well, the surfing was good= =20 this week so why spoil it?=20 Now they are in a panic because the Energy F_hrer is visiting old ladies=20 living in trailer parks, advising them not to pay their SDG&E electricity= =20 bill, and to continue to operate their air conditioners.? SDG&E puts a full= =20 page ad in the local newspaper telling everyone that SDG&E is doing=20 everything it can to lower their electric bills, including asking the ISO f= or=20 a $250 price cap, but the public can help by calling the ISO [address and= =20 phone number provided in the ad] and urging them to lower the cap.? I alway= s=20 thought the location of the ISO was a State secret for security reasons.? N= o=20 secrets in San Diego.=20 But we are not done.? No sir, we are not.? Those buffalo heads who run that= =20 company decide they will win a gold star on their collective foreheads, and= =20 implement one of the four resolutions passed by the Electric Oversight=20 Board.? The one they pick is to petition FERC on an expedited basis to cap = at=20 $250, the price at which sellers may bid energy or ancillary services into= =20 the ISO and the PX.? The primary reason is that Western power markets are n= ot=20 workably competitive.? In other words, they want FERC to set a max price on= =20 what generators can sell in addition to the price limit at which the ISO ca= n=20 buy!=20 What I find most astounding about this double talk is that SDG&E continues = to=20 collect tons of money from the sales of regulatory must run energy into the= =20 PX.?? These are sales from their stranded assets.? Their grief hasn=01,t ab= ated=20 their greed.=20 So, to recap, SDG&E missed the boat on price hedging, failed to win consume= r=20 confidence in public meetings, asked for help from suppliers and did nothin= g=20 in response, then filed at FERC to cap the sale price because the wholesale= =20 market into which they sell (over-priced?) energy is not workably=20 competitive.? Too much time in the direct sun light.=20 Things on the Island of California=20 ?@@@ The PUC issues its scathing report=20 The PUC report released yesterday is a gem with which I have not spent enou= gh=20 time.? I only read the Executive Summary, and that only because our counsel= ,=20 Dan Douglass forwarded me a copy. Let me pick out some of the gems in=20 President Lets Do Lynch=01,s burrito.? I would recommend reading the whole = text=20 if you have time, and if you seek perverse entertainment.=20 =01&California is experiencing major problems with electricity supply and= =20 pricing caused by policies and procedures adopted over the past ten years.= =20 =01& Since June, wholesale prices for electrical power in California have= =20 increased on average 270% over the same period in 1999, resulting in over $= 1=20 billion in excess?? payments for electricity.=20 =01&Hot weather, aging power plant and transmission infrastructure, and=20 dysfunctional bidding behavior in the wholesale power markets combined to= =20 drive prices up ...=20 =01&Because of serious market defects and tight supply of electricity,=20 purchasers of California power will likely pay billions more in electricity= =20 costs this year. Moreover, these price increases do not necessarily fund ne= w=20 investments in electricity supply or delivery reliability - they may flow= =20 solely to power producer profit margins.=20 =01&Despite the Electricity Oversight Board's legislative mandate to overse= e=20 those institutions, we have been unable to obtain [bid] data. Nevertheless,= =20 ... , we believe enough evidence of questionable behavior exists that the= =20 Attorney General should conduct an investigation into these statewide marke= t=20 practices, coordinating with other State agencies, including the PUC and th= e=20 EOB. Such an investigation would provide the factual foundation that=20 California policy makers and regulators need to recover any illegally=20 obtained profits.=20 =01&A momentous consequence of California's attempt to create a market in= =20 electricity is that the federal government now regulates California's=20 electric system. Washington D.C. now controls pricing decisions directly at= =20 the wholesale level and indirectly at the retail level and, to the extent= =20 that supply incentives are correlated to prices, Washington, D.C. now affec= ts=20 California's ability to attract new investment in power plants.=20 =01&Past administrations' willingness to cede the State's authority to the= =20 federal government combined with the legislative creation of two non-public= =20 supervisory organizations that have no duty to protect the public or consid= er=20 the retail customer. The "Independent System Operator" (ISO) and the "Power= =20 Exchange" (PX), the nonprofit private corporations that operate the State's= =20 transmission system and control wholesale pricing policies, are governed by= =20 boards whose members can have serious conflicts of interest. Some of these= =20 board members or their companies financially benefit from higher prices in= =20 electricity markets. Neither of these private organizations is accountable = to=20 the State or its consumers ....=20 ?=20 =01&Despite the federalization and the fragmentation of the State's electri= c=20 services, the State of California should protect its businesses and consume= rs=20 from cartel pricing; collusive behavior; inadequate power plant maintenance= =20 and lack of market planning for adequate electricity supplies.=20 =01&California consumers and businesses deserve to know in advance - as San= =20 Diegans did not this summer - how and when the price of an essential servic= e=20 like electricity will double. California is now largely constrained by=20 federal mandates from providing comprehensive retail price relief as long a= s=20 wholesale prices remain so high. If California tried to re-impose a price= =20 freeze in San Diego now, federal regulators would likely prevent that=20 action.? ... Short-term price relief, however, cannot resolve market gaming= =20 or fundamental wholesale pricing problems controlled by federal regulators.= =20 ?=01&We have been precluded from obtaining the data necessary to know if th= e ISO=20 and PX failed to detect manipulation and gaming on several fronts. We do no= t=20 know how market players acted in price offering and bidding and scheduling.= =20 The FERC has just announced an inquiry into national pricing and energy=20 market issues. California should not wait for national findings before it= =20 investigates California market practices. We recommend that the California= =20 Attorney General immediately subpoena relevant records and data to determin= e=20 the pricing and offering behavior of market participants; the actions of th= e=20 ISO and its board members; and the actions of generators in supplying=20 California's energy needs.=20 =01&Ten Actions to Consider or Act Upon to Prevent Current Electricity Prob= lems=20 From Spreading in 2001: ...=20 ?=20 ? 2. Create a California Energy Council, modeled on the National Security= =20 Council, to unify State action to resolve energy problems and to perform=20 integrated energy planning;=20 3. Ask FERC for extended wholesale price cap authority to moderate Californ= ia=20 wholesale market pricing;=20 4. Ask FERC to recognize the defects in the California and western regional= =20 markets and find that no competitive market exists in California power=20 markets;=20 ?...=20 ? ?8. Eliminate potential conflicts of interest in ISO/PX stakeholder board= s;=20 9. Improve California's ability to obtain ISO and generator data and enhanc= e=20 the State's enforcement capability for power plant maintenance; price=20 manipulation and generation gaming, consistent with protection of proprieta= ry=20 business information;=20 10. Provide the EOB with effective enforcement ability and additional=20 oversight authority for the ISO and PX. =01&Ten Issues to Consider or Act Upon Within the Next Six Months: ...=20 ? 4. Streamline state power plant siting procedures; consistent with=20 environmental requirements, and prioritize applications to advance clean,= =20 BACT+ power plant proposals.=20 5. Institute "use-it -or- lose-it" permitting power plant licensing and=20 emissions credits rules to ensure power plants get built;=20 ...=20 ?8. Reform PX pricing protocols and structures to lower wholesale and retai= l=20 prices and reduce excess profits=018 I told you I don=01,t need to write a Burrito anymore.? The Democrats in=20 Sacramento are doing that for me.? Welcome comrade.=20 Things on the Island of California=20 ?@@@ The ISO invokes $250 price caps.? Duh!=20 It is really hard to describe the drama of an ISO Governing Board meeting,= =20 especially when our favorite topic arises.? It seems the only time the Boar= d=20 becomes animated is when one of three issues are on the agenda: price caps,= =20 FTRs, and priorities for software enhancements. Otherwise, its pretty much= =20 hum-drum.=20 =01+Round and =01+round we went, once again.? A few more forced votes tippe= d the=20 scale in favor of the cap.? There were 15 yes votes, which included a force= d=20 yes vote from our friend Jerry Toenyes by order of Secretary of Energy Mr.= =20 Richardson. [Jerry, did you realize that the last letters of your name coul= d=20 be re-arranged to spell =01&NO ET YES=018?? Kind of a french thing.] I=01,m= sorry=20 about that vote, Jerry.? You still go in my book as one of the brave and bo= ld=20 for standing up to that sort of intimidation for so long.? Your picture in= =20 the SF Chron said it all.=20 The brave souls who stood tall and voted NO included David Parquet (Enron),= =20 Jan Smutny-Jones (IEP), Barbara Barkovich (CLECA), Caolyn Kehrein (CMA), Da= n=20 Kirshner (EDF), and Stacy Roscoe (Procter & Gamble).? Now, I must admit tha= t=20 Dynegy=01,s Greg Blue did help by voting a Texas No, spelled =01&A-B-S-T-A-= I-N=018.??=20 I have instructed Dynegy trader Dave Francis in Houston to work with Greg t= o=20 correct that problem.? We=01,re going to work things out.=20 The Energy F_hrer addressed the Board, again.? I didn=01,t mind that I only= had=20 a few brief, very brief moments to address the Board, and Herr (Hair?) Peac= e=20 got over 20 minutes.? That didn=01,t bother me at all.? He did more damage = to=20 himself in 20 than I could do in 2.? He blasted away at everyone who oppose= d=20 him.? He pined about Camden quitting the Board.? He said he knew how prices= =20 and markets work, that it isn=01,t the way those academic egg-head, FERC-lo= ving=20 economists tell you who pray to the gods of competition.? He lambasted WAPA= =20 for withholding generation to protect fish and wildlife (what was that all= =20 about?).? He predicted that on Thursday=01,s PUC meeting he and all the oth= er=20 powerful Democrats, Republicans and angry citizens of San Diego would deman= d=20 that the PUC impose a rate cap on retail electric rates in San Diego that a= re=20 just and reasonable (it didn=01,t happen).? And on and on and on.? This man= is=20 very delusional. He believes that Steve, and only Steve Peace can save the= =20 world.? He believes that political will trumps judicial, quasi-judicial, or= =20 independent Board actions.? This man makes relevant all the abstract musing= s=20 of the philosopher Friedrich Nietzsche (1844-1900) ... The will to power, t= he=20 ?bermensch, the transvaluation of values, etc.=20 But we are getting under (uber?) his skin, with the help of the press.?=20 Wednesday afternoon I called Commissioner Dick Bilas to see if he thought= =20 whether the next day=01,s PUC meeting was going to be a roll over. Dick sai= d he=20 got a call from Peace, and that Peace said he would not come to the meeting= .?=20 Apparently, Peace had received a lot of press, and all of it bad.=20 That=01,s the thin line of freedom which keeps tyranny at least one step aw= ay=20 from our front door.=20 ?>>> Things at the throne of FERC=20 ?@@@ Amen for the Morgan Stanley Order=20 And now, the good news.? You deserve this.? FERC gave the California market= a=20 little wiggle room last Friday.? FERC issued a last minute reply to the=20 complaint by Morgan Stanley Capital Group relating to the ISO=01,s intent t= o=20 lower the price cap.? FERC denied the complaint, but they didn=01,t waste t= ime=20 with an Order to simply deny a complaint.? FERC danced on the head of the I= SO=20 and pulled the bite out of the price cap.=20 Here are some excerpts:=20 =01&We accepted this [Amendment 21], not because it was a cap on sellers=01= , prices=20 but because it would promote order and transparency in the market by clearl= y=20 telling sellers of the maximum price the ISO was willing to pay and allowin= g=20 sellers to make informed economic choices on whether to sell in the ISO=20 market or to sell elsewhere...=20 =01& ... The ISO has no more or less ability to procure capacity and energy= than=20 any other buyer of these services ... If the ISO is unable to elicit=20 sufficient supplies at or below its announced purchase price ceiling (becau= se=20 generators are free to sell elsewhere if they choose), it will have to rais= e=20 its purchase price to the level necessary to meet its needs. ... Therefore,= =20 an increase in out-of-market (OOM) calls for generation may be necessary to= =20 maintain system reliability.? Because the current payment for OOM is not=20 subject to a maximum purchase price, the resulting overall payments may be= =20 higher.=20 =01&To the extent the ... ISO Board resolution contemplates implementing a= =20 directive that generators must bid their capacity into the ISO markets unde= r=20 any circumstances (e.g., when system load exceeds 38,000 MW), such a=20 requirement is not permitted by our ... Order and the ISO tariff. ... Futur= e=20 implementation of the ISO Board resolution with regard to a requirement to= =20 sell would require significant revisions to the ISO market rules.? Such=20 market changes could not become effective absent a corresponding amendment = to=20 the ISO tariff which would have to be filed under section 205 of the FPA.= =018=20 Well. What do you think about that?=20 Just wait.? Here is what the sleeping bear, Commissioner Hebert said in his= =20 concurring remarks:=20 =01&Getting to the bottom of the problem, in my view, requires us to begin = a=20 proceeding to rescind our approval of the ISO as the operator of the=20 California grid.? The record supports such a move. ... A memorandum to the= =20 ISO from a stakeholder who resigned from the governing board eloquently=20 brings to our attention repeated attempts to undermine the independence of= =20 the ISO. The memorandum also thoughtfully outlines consequences to the=20 markets of a return to =01+command and control.=01,=20 =01&Because these allegations come from a non-market participant, especiall= y=20 should we take heed.? We must also take notice of the public pressure on th= e=20 Board to compromise its independence.=018=20 Amen, brother, amen.=20 Odds and Ends (_!_)=20 As you can imagine, this week, like an endless string of weeks before this= =20 has been interminable.? I get about three phone calls a day from press=20 reporters, very little of which ever sees print.? My shtick is just too=20 complex for casual readers.? But I do notice that the reporters are asking= =20 better questions.? The public is becoming more savvy.? The information flow= =20 is moving in our favor, and will disarm the forces of evil, in about 10=20 years.=20 I have other problems on my mind.? I am working on a new computer system.?= =20 Really, it=01,s just an upgrade of an older computer that is a bit faster t= han=20 the laptop I tried to upgrade, very unsuccessfully.? As a result of the all= =20 the new hardware and software I purchased, my office looks like a war zone= =20 with an odd mix of PUC service copies, computer documentation, and diskette= s=20 laying all around. Quite a mess.=20 Prepare for the future.? Our next general meeting is scheduled for Thursday= =20 and Friday, October 5 and 6 at Moro Bay.? Barb Ennis will prepare a blurb f= or=20 us in next week=01,s Burrito about room reservations, timing, golf, etc.? O= ur=20 guest speakers will include MSC Chairman Professor Frank Wolak who will tal= k=20 on the subject of his choice, Ms. Irene Moosen of Grueneich Resource=20 Advocates who will make a presentation on the distributed generation case= =20 before the PUC, and William Freddo of PG&E National Energy Group who will= =20 give us some education on operating a power plant inside the New England IS= O.=20 Now for your daily bread, provided this week by Dan Douglass.? Last week we= =20 had a joke about Catholics.? This week it=01,s agnostics.=20 =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=20 An atheist was taking a walk thru the woods, admiring all that the accident= ?=20 of evolution had created.? "What majestic trees!? What powerful rivers! Wha= t?=20 beautiful animals!"? he said to himself.=20 As he was walking alongside the river he heard a rustling in the bushes?=20 behind him.? As he turned to look, he saw a 7 foot grizzly bear charging?= =20 towards him. He ran as fast as he could up the path.? He looked over his?= =20 shoulder and saw that the bear was closing in on him.? He tried to run even= ?=20 faster, so scared that tears were coming to his eyes. His heart was pumping= ?=20 frantically as he tried to run even faster, but he tripped and fell on the?= =20 ground.? He rolled over to pick himself up and saw the bear right on top of= ?=20 him raising its paw to kill him.=20 At that instant he cried out "Oh my God!" And time stopped. The bear froze.= ?=20 The forest was silent.? The river even stopped flowing.? A bright light=20 shone? upon the man, and a voice out of the sky said, "You deny my existenc= e=20 all? these years, teach others I don't exist and even credit my creation to= =20 a? cosmic accident, and now do you expect me to help you out of this?=20 predicament?? Am I to count you as a believer?"=20 The atheist, ever so proud, looked into the light and said, "It would be=20 rather hypocritical to ask to be counted as a believer after all these=20 years,? but could you make the bear a believer?"=20 "Very well" said the voice. And the light went out, the river flowed, the?= =20 sounds of the forest continued, and the bear brought both paws together,?= =20 bowed his head, and said, "Lord, I thank you for this food which I am about= ?=20 to receive."=20 =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=20 Amen.? And have a great weekend.? Oh, and thanks to all of you who sent me= =20 happy birthday wishes.? It was very much appreciated.=20 KSB=20 gbaMessage-ID: <20160637.1075842972661.JavaMail.evans@thyme> Date: Fri, 15 Sep 2000 00:55:00 -0700 (PDT) From: steven.kean@enron.com To: jeff.dasovich@enron.com Subject: Re: Two Governor's Press Releases--More Courage from the Capitol Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Jeff Dasovich X-cc: X-bcc: X-Folder: \Jeff_Dasovich_Dec2000\Notes Folders\All documents X-Origin: DASOVICH-J X-FileName: jdasovic.nsf Preempt me, please! Jeff Dasovich@EES 09/13/2000 06:22 PM To: Mary Hain/HOU/ECT@ECT, Joe Hartsoe/Corp/Enron@ENRON, Cynthia Sandherr/Corp/Enron@ENRON, Sarah Novosel/Corp/Enron@ENRON, Paul Kaufman/PDX/ECT@ECT, Sandra McCubbin/SFO/EES@EES, Mona L Petrochko/SFO/EES@EES, Susan J Mara/SFO/EES@EES, James D Steffes/HOU/EES@EES, mpalmer@enron.com, Karen Denne/Corp/Enron@ENRON, Richard Shapiro/HOU/EES@EES, Steven J Kean/NA/Enron@Enron cc: Subject: Two Governor's Press Releases--More Courage from the Capitol ---------------------- Forwarded by Jeff Dasovich/SFO/EES on 09/13/2000 06:18 PM --------------------------- "Julee Malinowski-Ball" on 09/13/2000 06:10:16 PM Please respond to "Julee Malinowski-Ball" To: "Baker Carolyn (E-mail)" , "Bill Carlson (E-mail)" , "Bill Woods (E-mail)" , "Curt Hatton (E-mail)" , "Curtis Kebler (E-mail)" , "David Keane (E-mail)" , "David Parquet (E-mail)" , "Duane Nelsen (E-mail)" , "Ed Tomeo (E-mail)" , "Edward Maddox (E-mail)" , "Eileen Kock (E-mail)" , "Ellery Bob (E-mail)" , "Escalante Bob (E-mail)" , "Frank DeRosa (E-mail)" , "Greg Blue (E-mail)" , "Hap Boyd (E-mail)" , "Jack Pigott (E-mail)" , "Jan Smunty-Jones (E-mail)" , "Jim Willey (E-mail)" , "Joe Greco (E-mail)" , "Joe Ronan (E-mail)" , "John Stout (E-mail)" , "Jonathan Weisgall (E-mail)" , "Katie Kaplan (E-mail)" , "Kent Fickett (E-mail)" , "Lynn Lednicky (E-mail)" , "Marty McFadden (E-mail)" , "Paula Soos (E-mail)" , "Robert Lamkin (E-mail)" , "Roger Pelote (E-mail)" , "Steve Ponder (E-mail)" , "Steven Kelly (E-mail)" , "Sue Mara (E-mail)" , "Tony Wetzel (E-mail)" , "Trond Aschehoug (E-mail)" , "William Hall (E-mail)" , "Richard Hyde (E-mail)" , "Sandi McCubbin (E-mail)" , "Stephanie Newell (E-mail)" , "Jeff Dasovich (E-mail)" cc: "Karen Edson" Subject: Two Governor's Press Releases GOVERNOR DAVIS PRESSES FERC FOR ACTION ON WHOLESALE POWER RATES: Calls on Federal Regulators to Reduce Prices, Issue Refunds GOVERNOR DAVIS NAMES KAHN CHAIR OF THE GOVERNOR'S CLEAN ENERGY GREEN TEAM OFFICE OF THE GOVERNOR ---------------------------------------------------------------------------- ---- PR00:238 FOR IMMEDIATE RELEASE September 12, 2000 GOVERNOR DAVIS PRESSES FERC FOR ACTION ON WHOLESALE POWER RATES Calls on Federal Regulators to Reduce Prices, Issue Refunds SAN DIEGO - At a Federal Energy Regulatory Commission (FERC) hearing today in San Diego, Governor Gray Davis reiterated his call to federal regulators to intervene "to the fullest extent possible" to lower electricity prices in California. "FERC bears responsibility to ensure that a workably competitive market exists before California consumers and California's economy are subjected to unconstrained, market-based electricity prices," said Governor Davis in a statement read by Energy Oversight Board Chairman Michael Kahn. "Consequently, I renew my prior request that the Commission act with utmost speed to intervene to the fullest extent possible to restore wholesale prices to fair levels and to remedy harms that have resulted from the exercise of market power." Governor Davis noted that he and state lawmakers have taken dramatic action in recent weeks to provide rate relief. "While these actions should provide short-term rate predictability and longer-term benefits to customers in terms of improved supplies, the fundamental problem of exorbitant wholesale prices still exists and remains the responsibility of FERC to address," said the governor. "No combination of state actions can substitute for federal action to ameliorate the problems of California's wholesale markets." Governor Davis has taken the following actions in reaction to rising electricity prices in San Diego: On June 14, he called for emergency reduction of electricity use by all state facilities in the San Francisco Bay area in response to electricity emergency and rolling blackouts. On June 15, he called on chairpersons of the Public Utilities Commission (PUC) to analyze the conditions that led to electricity shortages in the San Francisco Bay area the previous day, including a statewide perspective on the price and delivery of electricity. Report was completed, submitted to the governor and released on August 2. On July 27, 2000, Governor Davis called on federal and state regulators to take swift action to extend the caps on wholesale electric rates in California and provide San Diego ratepayers with million of dollars in refunds. In letters written by the governor to two state regulatory agencies and two California-based panels charged with overseeing California's power market, he called for a coordinated state effort to urge federal regulators to take strong measures to reduce power rates in both the short- and long-term. On August 2, 2000, Governor Davis issued three Executive Orders designed to reduce energy consumption by state government and speed up the time it takes new power generating facilities to win approval from state agencies. On August 9, 2000, Governor Davis called on the Public Utilities Commission (PUC) to establish a two-year plan that would cut electricity rates by nearly half for residential and business customers of San Diego Gas & Electric. The governor also reached an agreement with the California Grocers Association that will save enough electricity to provide power to between 50,000 and 60,000 homes during periods of peak demand, as grocers agreed to reduce power consumption by 10 percent during Stage One emergencies. On August 10, 2000, Governor Davis wrote a letter to President Clinton urging him to expedite FERC's investigation to determine whether current electric rates in San Diego were unjust. On August 22, 2000, Governor Davis called on President Clinton to release emergency funds from the Low-Income Home Energy Assistance Program (LIHEAP) to the state to help low-income Californians pay their rapidly-rising electricity bills. On August 23, 2000, President Clinton responded to Governor Davis' request by releasing $2.6 million in emergency funds to help low-income Southern Californians cope with the surge in their electricity bills. The President also asked federal regulators to speed up their investigation into the operation of U.S. power markets and urged the Small Business Administration to use its credit programs to help small firms hurt by the price increases. On August 23, 2000, Governor Davis reached agreement with legislators on legislation to provide relief to San Diego ratepayers. The governor signed two bills into law on September 6, 2000. Please see attached letter (below). # # # SEPTEMBER 12, 2000 STATEMENT OF GOVERNOR GRAY DAVIS TO THE FEDERAL ENERGY REGULATORY COMMISSION CONCERNING ITS INVESTIGATION OF WHOLESALE PRICE ESCALATION IN CALIFORNIA The Summer of 2000 has confronted California with an electricity crisis that seriously threatens the safety, health and well being of citizens and businesses throughout the state. At the heart of the crisis is the extraordinary run up in prices for wholesale electric energy and ancillary services, accompanied by deteriorating service and reliability. In San Diego, electric customers' bills have more than doubled this summer, threatening permanent harm to businesses and the health and welfare of residential customers in the warm southern climate. All remaining California electric consumers are faced with similar prospects as their legislated rate freeze periods come to an end. In San Francisco we saw rolling blackouts for the first time in our history. As soon as the dimensions of the crisis became evident, I directed California regulators, including the Public Utilities Commission and the Electricity Oversight Board, and the Independent System Operator, to take immediate steps to identify and implement specific measures to mitigate the damage, including restoring price caps at Summer 1999 levels. I am happy to report that those measures have been adopted, although not without considerable resistance from self-interested parties. In recent weeks, I have worked with the California Legislature to enact further relief within the existing framework of options now available to the state. These include provisions to stabilize retail rates, expedite generation licensing where possible, implement targeted demand reduction and demand response and remove constraints in transmission and distribution systems. I have also established a task force comprised of key state officials which is developing measures to increase energy efficiency and alternative supplies and to expedite permitting by state agencies. While these actions should provide short-term rate predictability and longer-term benefits to customers in terms of improved supplies, the fundamental problem of exorbitant wholesale prices still exists and remains the responsibility of the Federal Energy Regulatory Commission to address. No combination of state actions can substitute for federal action to ameliorate the problems in California's wholesale markets. A joint report submitted to me on August 2nd by the Chairman of the California Electricity Oversight Board and the President of the California Public Utilities Commission concluded that exorbitant wholesale prices in California result from wholesale market dysfunction and the exercise of market power by sellers. Subsequent reports by the Market Analysis Department and the Market Surveillance Committee of the California Independent System Operator reach the same conclusions. Subsequent behavior of wholesale electric prices during August confirms their conclusions, and subjects California to further economic damage. While I remain hopeful that California wholesale markets may ultimately become competitive and become capable of serving the interests of consumers and the public, I cannot and will not accept the liabilities to California that result from the current situation for even a short period. I intend to take any and all steps necessary to restore economic stability to the electric service infrastructure of California. FERC bears the responsibility under its organic act to assure just and reasonable wholesale electric rates. FERC bears responsibility to ensure that a workably competitive market exists before California consumers and California's economy are subjected to unconstrained, market-based electricity prices. Consequently, I renew my prior request that the Commission act with utmost speed to intervene to the fullest extent possible to restore wholesale prices to fair levels and to remedy harms that have resulted from the exercise of market power. ### OFFICE OF THE GOVERNOR ---------------------------------------------------------------------------- ---- A00:245 FOR IMMEDIATE RELEASE September 12, 2000 GOVERNOR DAVIS NAMES KAHN CHAIR OF THE GOVERNOR'S CLEAN ENERGY GREEN TEAM SACRAMENTO - Governor Gray Davis today announced the appointment of Michael A. Kahn as chairman of the newly-created Governor's Clean Energy Green Team. The Team was created by Governor Davis' signing of AB 970 by Assemblywoman Denise Moreno Ducheny (D-San Diego) on Wednesday. Mr. Kahn, 51, of San Francisco, is the chairman of the California Electricity Oversight Board, and he also serves as vice-chair of the California Commission on Judicial Performance. He has been senior partner and head of litigation at Folger Levin & Kahn LLP since 1979. Mr. Kahn has held numerous state and federal government appointments and assignments over the last 15 years. Mr. Kahn is the author of several articles and reports on litigation practice and Supreme Court history. He is a magna cum laude, Phi Beta Kappa graduate of the University of California, Los Angeles. Mr. Kahn also earned master of arts and juris doctorate degrees from Stanford University, where he was an editor of the Law Review. After graduation, he served for a year as a law clerk to Judge Ben C. Duniway of the Ninth Circuit Court of Appeals in San Francisco. The signing of AB 970 established the Governor's Clean Energy Green Team, which works to streamline the process of creating new power plants to ensure that an adequate supply of power will exist to make a deregulated marketplace work. The Team does this by working with local governments, identifying environmental impacts, developing recommendations for low interest financing programs for renewable energy and obtaining input on natural gas supply, emission offsets and water supply. Members do not receive a salary. This position does not require Senate confirmation. # # # Julee Malinowski-Ball Edson + Modisette Associate 925 L Street Suite 1490 Sacramento CA 95814 916-552-7070 FAX-552-7075 jmball@ns.net Message-ID: <26658543.1075843310470.JavaMail.evans@thyme> Date: Fri, 22 Dec 2000 04:00:00 -0800 (PST) From: sarah.novosel@enron.com To: susan.mara@enron.com Subject: Re: Wolak report Cc: donna.fulton@enron.com, jeff.dasovich@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: donna.fulton@enron.com, jeff.dasovich@enron.com X-From: Sarah Novosel X-To: Susan J Mara X-cc: Donna Fulton, Jeff Dasovich X-bcc: X-Folder: \Jeff_Dasovich_June2001\Notes Folders\All documents X-Origin: DASOVICH-J X-FileName: jdasovic.nsf Sue: I'm so impressed that you know how to put the link on the email. I can't figure out how to do that, and I think that looks much more "high tech" than attaching a silly old report. Thanks for the link. We can take it from here. Sarah Susan J Mara 12/22/2000 11:31 AM To: Sarah Novosel/Corp/Enron@ENRON, Donna Fulton/Corp/Enron@ENRON cc: Jeff Dasovich/NA/Enron@Enron Subject: Wolak report Call me computer illiterate. I could not figure out how to download the report off the web site, so here's the link. http://www.caiso.com/docs/2000/12/12/2000121215070918957.pdf Message-ID: <23542107.1075843330554.JavaMail.evans@thyme> Date: Tue, 23 Jan 2001 07:45:00 -0800 (PST) From: jeff.dasovich@enron.com To: teece@haas.berkeley.edu Subject: Re: CONFIDENTIAL (The Manifesto) Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Jeff Dasovich X-To: David Teece X-cc: X-bcc: X-Folder: \Jeff_Dasovich_June2001\Notes Folders\All documents X-Origin: DASOVICH-J X-FileName: jdasovic.nsf great idea.Message-ID: <12434767.1075852813161.JavaMail.evans@thyme> Date: Tue, 25 Sep 2001 10:35:20 -0700 (PDT) From: theresa.connor-smith@enron.com To: kenneth.lay@enron.com Subject: Confidential Question Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Connor-Smith, Theresa X-To: Lay, Kenneth X-cc: X-bcc: X-Folder: \KLAY (Non-Privileged)\Inbox X-Origin: Lay-K X-FileName: KLAY (Non-Privileged).pst Dear Ken, I'm not sure quite were to turn but was hoping you could assist me. I would like to keep this confidential especially regarding the New York Office. As my request has nothing to do with the people in this office or the group they are wonderful I've been with Enron since '97 and I relocated up to Connecticut to work with the New Power Company when I thought that the Enron employees would stay Enron employees. Afterwards of course we all were changed to NewPower employees. After a couple of months I made the move back to Enron and went to the New York office and work with the Enron Metals group here at 53rd street. (It was never my intention to leave Enron) Since the bombing I feel very displaced and my husband and I would really like to come back to Houston and was wondering if you could help me. I was on the trading floor working with Dave Delainey's group when he was in ENA and also was the Exec Secretary/Coordinator with the MWB group in George Warsoff's group. I would appreciate it very much if you were able to assist/guide me. Sincerely, Teri Teri Connor-Smith Admin Coordinator Enron Metals & Commodities Corp tsmith3@enron.com (212)715-5601Message-ID: <26937321.1075843427227.JavaMail.evans@thyme> Date: Fri, 13 Apr 2001 05:34:00 -0700 (PDT) From: jeff.dasovich@enron.com To: karen.denne@enron.com Subject: Re: CONFIDENTIAL - Residential in CA Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Jeff Dasovich X-To: Karen Denne X-cc: X-bcc: X-Folder: \Jeff_Dasovich_June2001\Notes Folders\All documents X-Origin: DASOVICH-J X-FileName: jdasovic.nsf Amen.Message-ID: <28168211.1075860837271.JavaMail.evans@thyme> Date: Fri, 30 Nov 2001 07:29:18 -0800 (PST) From: exenron@hotmail.com To: kenneth.lay@enron.com, mark.pickering@enron.com, beth.perlman@enron.com Subject: Thank you all very much for your support - NOT! Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: "another one" @ENRON X-To: Lay, Kenneth , Pickering, Mark , Perlman, Beth X-cc: X-bcc: X-Folder: \Kenneth_Lay_Mar2002\Lay, Kenneth\Inbox X-Origin: Lay-K X-FileName: klay (Non-Privileged).pst I genuinely believed in Enron and the Values of the company You demonstrated that that trust was misplaced and worth nothing I particularly like your adherance to the core values - you "respected" us, you "communicated" brilliantly with us, your fucking us over was "excellent", your "integrity" was without question You load of bastards - you screwed us all and got fat on the profits of our sweat I hope that the board and upper management rot in jail and never see the light of day again - apart from when you are exercising in the open prison yard in your shackles Just Another Fucked Over Ex-Employee _________________________________________________________________ Get your FREE download of MSN Explorer at http://explorer.msn.com/intl.aspMessage-ID: <31030466.1075843427442.JavaMail.evans@thyme> Date: Fri, 13 Apr 2001 06:37:00 -0700 (PDT) From: jeff.dasovich@enron.com To: karen.denne@enron.com Subject: Re: CONFIDENTIAL - Residential in CA Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Jeff Dasovich X-To: Karen Denne X-cc: X-bcc: X-Folder: \Jeff_Dasovich_June2001\Notes Folders\All documents X-Origin: DASOVICH-J X-FileName: jdasovic.nsf Were you on the call yesterday---I went ballistic. And where are you now!?! The calls underway. Karen Denne 04/13/2001 12:45 PM To: Jeff Dasovich/NA/Enron@Enron cc: Subject: Re: CONFIDENTIAL - Residential in CA I get so worked up over this issue... I really think now is the time to speak up and dissent. Skilling told us at a floor meeting that as an organization we've made poor decisions in the past, and he believes it's because the people who disagreed with those decisions never spoke up. So help me out! From: Jeff Dasovich on 04/13/2001 12:34 PM Sent by: Jeff Dasovich To: Karen Denne/Corp/Enron@ENRON cc: Subject: Re: CONFIDENTIAL - Residential in CA Amen. Message-ID: <31386690.1075860837352.JavaMail.evans@thyme> Date: Fri, 30 Nov 2001 07:48:06 -0800 (PST) From: steven.alexander@us.artemisintl.com To: ken_lay@enron.net, kenneth_lay@enron.net Subject: A Supportive Note Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: steven.alexander@us.artemisintl.com@ENRON COMMUNICATIONS X-To: ken_lay@enron.net, kenneth_lay@enron.net X-cc: X-bcc: X-Folder: \Kenneth_Lay_Mar2002\Lay, Kenneth\Inbox X-Origin: Lay-K X-FileName: klay (Non-Privileged).pst Dear Mr. Lay: I'm writing this note to you as a show of support to you during your dire times. The reason that I share this with you is my respect for you as a CEO, a business leader and a person. My wife is one of your employees who routinely shares stories about you that are nothing less than inspiring. I know that during difficult times, sometimes words emerge that can help people through difficult times. I believe that you are sincere man and know that you must be broken hearted, but I hope that this article can help you lead a dispirted workforce to see things more clearly. My wife, Shelly Pierce, has worked for Enron for the past two years and like many of your employees, has lost a great deal of her life savings. Of course, I accept most of the blame for this for reasons related to this article. I lost my investment discipline and held out the false hope that Enron could not falter. After reading the article to her while I was out of town, I believe that her spirit was a bit rejuvenated and she was ready to face the challenges that lay before you. Mr. Lay, I appreciate the opportunity that you have given my wife and our family and hope that this story inspires you to regain your successes. ------------------------------------------------------------------------------------------------------------------------------------------------------------ From the USA Today, Tuesday, November 27, 2001, page 15A. "In recession, face brutal facts, thrive" By Jim Collins A man in his early 20s recently asked me, "So what's a recession like?" Its an entirely alien concept to him; he'd grown up during the greatest economic boom in modern memory. His question drove home the fact that we haven't faced a severe, protracted economic setback for nearly 2 decades, leaving us terribly unpracticed at dealing with tough times. With this recession - long in coming, perhaps long to stay - now officially upon us, it is imperative that corporate leaders relearn a key lesson about how great companies (and great people) deal with difficult times differently from how they deal with merely good ones. That lesson is the "Stockdale Paradox," a peculiar psychology shown by those who emerge from tough times not just intact, but stronger. Adm. Jim Stockdale was the highest-ranking U.S. military officer in the Hanoi prison camp during the Vietnam War. Tortured many times during his 8-year imprisonment, Stockdale lived without any prisoner's rights, no set release date and no certainty as to whether he would ever again see his family. He shouldered the burden of command while fighting an internal war against his captors and their attempts to use the prisoners for propaganda. At one point, he beat himself with a stool and cut himself with a razor, deliberately disfiguring himself so that he could not be put on video as an example of a "well-treated prisoner." He exchanged secret intelligence information with his wife through their letters knowing that discovery would mean more torture and perhaps death. After his release, Stockdale became the first three-star officer in the history of the Navy to wear both aviator wings and the Congressional Medal of Honor. You can understand, then, my anticipation at the prospect of spending part of an afternoon with Stockdale, who happened to be at the Hoover Institute across the street from my office when I taught at Stanford. In preparation, I read In Love and War, the book he and his wife wrote to chronicle their experiences those 8 years. As I read the book, I found myself getting depressed. It just seemed so bleak - the uncertainty of his fate, the brutality of his captors. And then it dawned on me: Here I am sitting in my warm comfortable office, looking out over the Stanford campus on a beautiful Saturday afternoon. I'm getting depressed reading this, and I know that he gets out, reunites with his family and becomes a national hero. If it feels depressing for me, how on earth did he deal with it when he was actually there and did not know the end of the story? "I never lost faith in the end of the story," Stockdale said when I asked him. "I never doubted not only that I would get out, but also that I would prevail in the end and turn the experience into the defining event of my life that, in retrospect, I would not trade." I didn't say anything for many minutes, and we continued the slow walk toward the faculty club, Stockdale limping and arc-swinging his leg, still stiff from repeated torture. Finally, I asked, "Who didn't make it out?" "Oh, that's easy," he said. "The optimists." "The optimists? I don't understand," I said, completely confused. "The optimists. Oh, they were the ones who said, 'We're going to be out by Christmas.' And Christmas would come, and Christmas would go. Then they'd say, 'We're going to be out by Easter.' And Easter would come, and Easter would go. And then Thanksgiving, and then it would be Christmas again. And they died of a broken heart." After another long pause, he turned to me and said, "This is a very important lesson. You must never confuse faith that you will prevail in the end - which you can never afford to lose - with the need for discipline to confront the most brutal facts of your current reality, whatever they might be." My conversation with Stockdale had a profound influence on me, but I never really considered it a business lesson until my research team began to wrestle with the question of why some companies rise from difficulty to become great while others emerge from those exact same difficulties weakened and dispirited. We found that companies that became great embraced a corporate version of the Stockdale Paradox. Fannie Mae, for example found itself in the 1982 recession losing $1M every business day, with $56B in loans under water. Many analysts thought Fannie Mae, which was getting 9% on its mortgage portfolio but paying 15% on the debt it issued, was doomed. But CEO David Maxwell and his team never wavered in their aim to not merely survive, but also to prevail as a great company. Yes, they confronted the brutal fact that the interest-rate problem was not going to magically disappear (certainly not by Christmas). But they used this grim fact as a catalyst for creating an entirely new business model based on asking three central questions of greatness: What can we potentially do better than any other company in the world? What can best drive our economic engine? What best ignites the passions of our people? Instead of reacting to the recession with mindless restructuring, Fannie Mae rebuilt itself based on its answers to these questions. Eventually, it generated investor returns nearly eight times those of the general stock market. When asked how he dealt with the nay Sayers and the analysts who wrote Fannie Mae off, Maxwell said that it was never an issue inside the company. "Of course, we had to stop doing a lot of stupid things, but we never entertained the possibility that we would fail. We were going to use the calamity as an opportunity to remake Fannie Maw into a great company." The sad truth is that most executive teams won't respond that way to these dark days of uncertainty. Instead of using this recession as an opportunity to fundamentally rethink their business and rebuild a culture of discipline, the will simply restructure, lay off a bunch of people and liquidate their cultural equity. Mediocre leaders will hold out false hopes for a quick fix, only to watch those hopes be swept away by events. Their companies will begin to die of a broken heart. It need not be this way. Those who lead with the Stockdale Paradox - those who retain the unwavering faith that they will find a way to prevail in the end, but who also retain the discipline to confront the most brutal facts of reality - will find this an ideal time to rebuild and reinforce greatness. Used correctly, this recession can be a defining time in your firm's history that , in retrospect, you would not trade. Used wrongly, this recession will weaken your foundations and make it that much harder to become great. The choice is yours. Jim Collins, the author of Good to Great, operates a management-research laboratory in Boulder, Colo. ------------------------------------------------------------------------------------------------------------------------------------------------------------ Regards, Steve Steve Alexander Vice President, North American Artemis Consulting Artemis International Solutions Corporation Office: +1 281.338.9616 Mobile: +1 281.830.7430 www.artemisintl.comMessage-ID: <892420.1075843476599.JavaMail.evans@thyme> Date: Thu, 10 May 2001 06:01:00 -0700 (PDT) From: jeff.dasovich@enron.com To: paul.kaufman@enron.com, susan.landwehr@enron.com Subject: Eeegads... Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Jeff Dasovich X-To: Paul Kaufman, Susan M Landwehr X-cc: X-bcc: X-Folder: \Jeff_Dasovich_June2001\Notes Folders\All documents X-Origin: DASOVICH-J X-FileName: jdasovic.nsf Don't know how I got on the list, but just got my invitation to the Western Conference of PUCs meeting June 3-6 where the guest speakers are Frank Wolak and Gary Locke. Oh dear.... Best, JeffMessage-ID: <2612882.1075843476998.JavaMail.evans@thyme> Date: Thu, 10 May 2001 06:55:00 -0700 (PDT) From: jeff.dasovich@enron.com To: paul.kaufman@enron.com Subject: RE: Eeegads... Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Jeff Dasovich X-To: Paul Kaufman X-cc: X-bcc: X-Folder: \Jeff_Dasovich_June2001\Notes Folders\All documents X-Origin: DASOVICH-J X-FileName: jdasovic.nsf hey, when are you scheduled to go in for your attitude labotomy? Paul Kaufman/ENRON@enronXgate 05/10/2001 01:51 PM To: Jeff Dasovich/NA/Enron@Enron, Susan M Landwehr/NA/Enron@Enron cc: Subject: RE: Eeegads... I'll be there, as will Sandi McCubbin. Are you interested in going? I thought not. -----Original Message----- From: Dasovich, Jeff Sent: Thursday, May 10, 2001 11:02 AM To: Kaufman, Paul; Landwehr, Susan Subject: Eeegads... Don't know how I got on the list, but just got my invitation to the Western Conference of PUCs meeting June 3-6 where the guest speakers are Frank Wolak and Gary Locke. Oh dear.... Best, Jeff Message-ID: <27492269.1075843909671.JavaMail.evans@thyme> Date: Wed, 31 Jan 2001 00:16:00 -0800 (PST) From: mike.mcconnell@enron.com To: shanna.funkhouser@enron.com Subject: Re: Confidential - Rob Stewart Cc: rick.bergsieker@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: rick.bergsieker@enron.com X-From: Mike McConnell X-To: Shanna Funkhouser X-cc: Rick Bergsieker X-bcc: X-Folder: \Mark_McConnell_June2001\Notes Folders\All documents X-Origin: MCCONNELL-M X-FileName: mmcconn.nsf Shanna, I'm supportive of the raise to $150k. I think he is doing a good job and has a lot of value. He didn't fair well during the ranking due to lack of big $ or closure but maybe this will send him a good message. Thanks, mMessage-ID: <1620799.1075844934687.JavaMail.evans@thyme> Date: Wed, 1 Mar 2000 00:48:00 -0800 (PST) From: michael.burke@enron.com To: stanley.horton@enron.com Subject: Re: California Truck Wreck on 2/28 Involving Cummings and an Ex-EOTT Driver; CONFIDENTIAL AND PRIVILEGED ATTORNEY/CLIENT COMMUNICATION AND ATTORNEY'S WORK PRODUCT Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Michael Burke X-To: Stanley Horton X-cc: X-bcc: X-Folder: \Stanley_Horton_1\Notes Folders\All documents X-Origin: HORTON-S X-FileName: shorton.nsf ---------------------- Forwarded by Michael Burke/Houston/Eott on 03/01/2000 08:55 AM --------------------------- Cutty Cunningham 02/29/2000 03:31 PM To: Steve Duffy/Houston/Eott@Eott cc: Susan Ralph/Houston/Eott@Eott, Bob Jacobs/Long_Beach/Eott@Eott, Scott Clark/Bakersfield/Eott@Eott, Michael Burke/Houston/Eott@Eott, Gary Fuller/Bakersfield/Eott@Eott, Dana Gibbs/Houston/Eott@Eott, Lori Maddox/Houston/Eott@Eott, Mary Ellen Coombe/Houston/Eott@Eott, Walt Zimmerman/Houston/Eott@Eott, Mike Frank/Houston/Eott@Eott, Molly Sample/Houston/Eott@Eott, Edward Attanasio/Remote/Eott@Eott, Scott Vonderheide/Corp/Enron@Enron Subject: Re: California Truck Wreck on 2/28 Involving Cummings and an Ex-EOTT Driver; CONFIDENTIAL AND PRIVILEGED ATTORNEY/CLIENT COMMUNICATION AND ATTORNEY'S WORK PRODUCT Here is the web site for the LA Times article: http://www.latimes.com/news/state/20000229/t000019596.html If this hot spot doesn't work, you can copy it and paste it into your browser URL line. Cutty Message-ID: <8493737.1075857691739.JavaMail.evans@thyme> Date: Tue, 6 Feb 2001 15:07:30 -0800 (PST) From: lavorato@enron.com To: steven.kean@enron.com Subject: RE: CONFIDENTIAL - DO NOT DISTRIBUTE Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Lavorato, John J. X-To: Kean, Steven X-cc: X-bcc: X-Folder: \jlavora\Sent Items X-Origin: Lavorado-J X-FileName: jlavora.pst Steve looks ok. Although I always thought I built Canada. I guess not eh. Lavo. -----Original Message----- From: McVicker, Maureen On Behalf Of Kean, Steven Sent: Tuesday, February 06, 2001 4:42 PM To: Lay, Kenneth; Skilling, Jeff; Palmer, Mark; Frevert, Mark; Delainey, David; Dietrich, Janet; Kitchen, Louise; Whalley, Greg; Bibi, Philippe; Karen S Owens@ees; Leff, Dan; Sunde, Marty; Mahoney, Peggy; Lavorato, John J. Subject: CONFIDENTIAL - DO NOT DISTRIBUTE CONFIDENTIAL - DO NOT DISTRIBUTE Steve Kean would like your comments on this email as soon as possible. Thanks. << File: 2001memoOrgChangesC.doc >> Message-ID: <14021573.1075846148299.JavaMail.evans@thyme> Date: Sun, 20 Feb 2000 09:31:00 -0800 (PST) From: steven.kean@enron.com To: jose.bestard@enron.com Subject: Re: Video Tape Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Jose Bestard X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf I'll send it back on Tuesday. Jose Bestard@ENRON_DEVELOPMENT 02/18/2000 08:02 PM To: Steven J Kean/HOU/EES@EES cc: Maureen McVicker/HOU/EES@EES Subject: Video Tape Steve. Did you get a chance to look at the video tape I gave you? I would like to have it back to show it in Brazil Thanks, Jose Message-ID: <19327742.1075846148390.JavaMail.evans@thyme> Date: Sun, 20 Feb 2000 09:40:00 -0800 (PST) From: steven.kean@enron.com To: j.metts@enron.com Subject: One more for Mark Metts Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: J Mark Metts X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf Am I taking care of you or what?? ---------------------- Forwarded by Steven J Kean/HOU/EES on 02/20/2000 05:30 PM --------------------------- Lynn Dunphy@ECT 02/18/2000 01:48 PM To: Steven J Kean/HOU/EES@EES cc: Subject: One more for Mark Metts Steve - One more person for Mark Metts to consider... Neerav Nanavaty was caught up in the APACHI restructuring, and apparently they were unable to promote him to Manager. (Our lists indicated that he would have been promoted in March). Cheers! Lynn Message-ID: <12079164.1075846158472.JavaMail.evans@thyme> Date: Mon, 17 Jul 2000 01:18:00 -0700 (PDT) From: steven.kean@enron.com To: james.noles@enron.com Subject: Jim Noles Named CEO of Enron Wind Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: James L Noles X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf Congratulations! ---------------------- Forwarded by Steven J Kean/HOU/EES on 07/17/2000 08:18 AM --------------------------- Office of the Chairman From: Office of the Chairman@ENRON on 07/14/2000 06:58 PM To: All Enron Worldwide cc: Subject: Jim Noles Named CEO of Enron Wind We are pleased to announce that Jim Noles, president and chief operating officer of Enron Wind, will assume the additional role of chief executive officer, effective immediately. Jim will continue to be based in Houston. Jim joined Enron Wind as its president in May of this year. Prior to that appointment, Jim was managing director for Enron's Operations Support Group of Global Asset Operations and provided operations and maintenance oversight and technical assistance to Enron's worldwide facilities. Previously, Jim worked with Enron International's Asset Management team where he formed the North American Asset Management Group to provide operation and maintenance services to Enron North America's electricity generation peaker plants that entered into service in 1999. Jim joined Enron in 1995 as vice president of Enron Development Corp. to head up its Middle East Regional Development team. Prior to joining Enron, Jim was an international marketer for TRW's Systems Integration Group with responsibilities in the Middle East. Jim served in the U.S. Army for 25 years, culminating his career as a Brigadier General. His education includes a bachelor's degree from the University of North Alabama and a master's of public administration from the University of Alabama. Jim has a solid track record in development, sales, operations, and leadership and has had a positive impact on Enron Wind's growth and profitability in the short period since joining the company. Please join us in congratulating Jim on his promotion and new responsibilities. Message-ID: <32806380.1075846158567.JavaMail.evans@thyme> Date: Mon, 17 Jul 2000 08:44:00 -0700 (PDT) From: steven.kean@enron.com To: rita.hartfield@enron.com Subject: Re: CI at EBS Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Rita Hartfield X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf Thanks for the message. Rita Hartfield@ENRON COMMUNICATIONS 07/17/2000 02:52 PM To: Steven J Kean/HOU/EES@EES cc: Anthony Mends/Enron Communications@Enron Communications Subject: CI at EBS Steve, I have heard "through the grapevine" that Amy Oberg has relayed to you that EBS will not be doing competitive intelligence and that you were dismayed to hear this. Amy is correct in the fact that EBS is not likely to buy the software Strategy that provides a strategic, top-down focus on competitive intelligence. However, EBS is doing tactical competitive analysis and market research. We are providing the business units with the information that they need to make intelligent decisions at the business unit level. Amy's view is that competitive intelligence (CI) belongs at the corporate level and that CI should drive the strategic direction of the company. You and I both know this is not the way Enron operates. I hope this e:mail does not sound negative but I did want you to know that EBS is providing information and intelligence to its business units -- it is just not in the context that Amy thinks it should be in. If you have any questions, please let me know. Rita Hartfield Phone: 713-853-5854 Cell: 713-304-5428 Fax: 713-646-8861 rita_hartfield@enron.net Message-ID: <7408837.1075846159446.JavaMail.evans@thyme> Date: Wed, 19 Jul 2000 15:57:00 -0700 (PDT) From: steven.kean@enron.com To: laura.schwartz@enron.com Subject: EBS/Blockbuster Local Media Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Laura Schwartz X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf Strong work, Laura! ---------------------- Forwarded by Steven J Kean/HOU/EES on 07/19/2000 10:55 PM --------------------------- Mark Palmer@ENRON 07/19/2000 05:48 PM To: Steven J Kean/HOU/EES@EES cc: Laura Schwartz/Corp/Enron@Enron, Karen Denne/Corp/Enron@ENRON Subject: EBS/Blockbuster Local Media Laura kicked some serious butt on local media. Excellent job, Laura! ---------------------- Forwarded by Mark Palmer/Corp/Enron on 07/19/2000 05:29 PM --------------------------- Laura Schwartz 07/19/2000 05:10 PM To: Karen Denne/Corp/Enron@ENRON, Mark Palmer/Corp/Enron@ENRON, Meredith Philipp/Corp/Enron@ENRON, Shelly Mansfield/Enron Communications@Enron Communications cc: Cindy Olson/Corp/Enron@ENRON Subject: EBS/Blockbuster Local Media Here is an update of local media covering today's announcement: Channel 13 Channel 11 Channel 26 Channel 45 KUHF KTRH KIKK KILT KUHF Laura Message-ID: <16420518.1075846160361.JavaMail.evans@thyme> Date: Mon, 24 Jul 2000 11:36:00 -0700 (PDT) From: steven.kean@enron.com To: rob.wilson@enron.com Subject: Re: Doctoral studies Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Rob Wilson X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf I think you have picked the two most interesting industries. Because energy and telecom both have natural monopoly characteristics, the government gets involved in economic regulation (not just the usual environment, safety, labor and other types of regulation which all businesses are subject to). That means that there is constant interplay between policy makers and the business community and that policy makers have alot to say about which business strategies will be successful. Rob Wilson@ENRON 07/24/2000 04:44 PM To: Steven J Kean/HOU/EES@EES cc: Mike McGowan/ET&S/Enron@ENRON Subject: Doctoral studies Steve, Vince Kaminski suggested I contact you, I'm the Gov't Affairs rep for NNG in Omaha and begin a doctoral studies program this fall at NU. I plan a research emphasis in regulatory politics, specific to energy and telecom market convergence and the public interest. I'd welcome any advice or suggestions you have regarding other potential area's of research, based on your professional experience in the public policy arena. I appreciate any guidance, I'm in the earliest stages of forming my advisory committee and curriculum of study. My supervisor, Mike McGowan, sends his regards. Message-ID: <30388339.1075846160430.JavaMail.evans@thyme> Date: Mon, 24 Jul 2000 11:48:00 -0700 (PDT) From: steven.kean@enron.com To: gwendolyn.petteway@enron.com Subject: Re: REVISION - New HR Rep for Public Affairs and Administration Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Gwendolyn Petteway X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf Please do send it out. Thanks for the kind words. I know you know how I feel about your work and I have shared that view widely. I have enjoyed working with you; I always valued your insights , your responsiveness, and your work ehtic. I wish you all the best in your new role. Gwendolyn Petteway@ENRON 07/24/2000 02:47 PM To: Steven J Kean/HOU/EES@EES cc: Subject: REVISION - New HR Rep for Public Affairs and Administration Arquella's last day is Wed., 7/26. ---------------------- Forwarded by Gwendolyn Petteway/HR/Corp/Enron on 07/24/2000 02:44 PM --------------------------- Gwendolyn Petteway 07/24/2000 02:16 PM To: Steven J Kean/HOU/EES@EES cc: Subject: New HR Rep for Public Affairs and Administration Steve, please see below my announcement relative to the upcoming HR changes. If you concur, I would like to send this out Monday, 7/31 to all Govt Affairs and PR employees. The formal transition meeting between Kim and I is scheduled for Monday, 7/31/00. Effectively Tuesday, August 1, the new HR Representative for Public Affairs and Administration is Kim Rizzi. To assist with the transition in HR teams, Kim and I previously met to discuss current activity for the Public Affairs and Administration group. Kim can be reached at ext. 33833. Kim's assistant is Jennifer Jordan and she can be reached at ext. 37554. My team and I have truly enjoyed working with the Public Affairs and Administration Group over the past 3 years . We have learned a great deal and even logged a few miles (to/fro Washington, DC and San Francisco) during the course of this partnership. It has all been a pleasure and I wish each of you the best! Effective August 1, I will assume the Director of Staffing role for the Associate and Analyst Program reporting to Charlene Jackson. Constance Charles, my assistant will be transferring with me. Wednesday, July 26th was Arquella Hargrove, our Human Resources Associate's last day with Corp Human Resources. Arquella will rotate to the CALME region and support HR Senior Director, Janie Bonnard when she returns from her leave. No she has not delivered the baby yet, but any day now!! We hope, she hopes...... Steve, I will truly miss working and partnering with you. You have made this Enron journey a bright, challenging and refreshing experience. Message-ID: <8165738.1075846161635.JavaMail.evans@thyme> Date: Mon, 31 Jul 2000 01:35:00 -0700 (PDT) From: steven.kean@enron.com To: robert.hemstock@enron.com Subject: Alberta PPA Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Robert Hemstock X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf ditto -- nice work Rob. Your insights on project stanley are also much appreciated. ---------------------- Forwarded by Steven J Kean/HOU/EES on 07/31/2000 08:33 AM --------------------------- Richard Shapiro 07/31/2000 07:31 AM To: Robert Hemstock/CAL/ECT@ECT cc: Aleck Dadson/TOR/ECT@ECT, Steven J Kean/HOU/EES@EES, James D Steffes/HOU/EES@EES Subject: Alberta PPA Your work on the Alberta PPA has not gone unnoticed and really is a model for the rest of the group as to how to approach the review and analysis of a significant transaction w/ huge reg. risk- the thoroughness and quality of your work were top notch as was the teamwork you exhibited thoughout the process..... not to mention the external leadership you provided on the issue w/ folks like Larry Charach. Thanks very much! Message-ID: <8869.1075846162120.JavaMail.evans@thyme> Date: Tue, 1 Aug 2000 02:11:00 -0700 (PDT) From: steven.kean@enron.com To: gary.fitch@enron.com Subject: Re: Tax Valuations for YR2000 Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Gary Fitch X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf Congratulations! Gary Fitch@ENRON on 07/27/2000 12:02:47 PM To: Bill Donovan/EPSC/HOU/ECT@ECT cc: Steven J Kean/HOU/EES@EES Subject: Tax Valuations for YR2000 Bill, we hit a home run this morning with HCAD. They have agreed to take my reduced valuation on the Enron fleet. A reduction of $16,079,000 in taxable value. This results in savings of $482,375. That's not all, our allocation based on records for operations outside of the state of Texas resulted in additional savings of $1,559,638. Total savings to our 2000 budget will be $2,042,013. Message-ID: <12240212.1075846163896.JavaMail.evans@thyme> Date: Thu, 3 Aug 2000 12:11:00 -0700 (PDT) From: steven.kean@enron.com To: tim.richards@corporate.ge.com Subject: Re: Thank You Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: "Richards, Tim J (CORP)" @ ENRON X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf Tim I enjoyed meeting with you too. As I mentioned, I thought your answers were thoughtful, well stated, and accurate. In our line of work it helps to triangulate using others' insights and I found yours particularly useful. "Richards, Tim J (CORP)" on 08/02/2000 09:01:46 AM To: "'rshapiro@enron.com'" , "'skean@enron.com'" cc: "'Kelshaw, Lisbeth'" Subject: Thank You Dear Steve and Rick, Thank you very much for inviting me to Houston yesterday to discuss Enron's Federal Government Affairs position. Your vision of the role for the Enron Washington office fits closely with my views on what a best-in-class Washington operation should offer, and it was helpful to learn more about Enron and its business units. Enron is clearly an exciting place to work, and the fact that public policy is so vital to the company's future makes the Washington position particularly attractive. It was a real pleasure to meet you yesterday, and I look forward to hearing from you again. Sincerely, Tim Richards Timothy J. Richards GE International Law & Policy 1299 Pennsylvania Avenue, NW; 1100W Washington, DC 20004 Phone: 202-637-4407 Home: 202-882-3385 Fax: 202-637-4300 Message-ID: <15974113.1075846164840.JavaMail.evans@thyme> Date: Tue, 8 Aug 2000 03:51:00 -0700 (PDT) From: steven.kean@enron.com To: jeffrey.shankman@enron.com Subject: Re: Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Jeffrey A Shankman X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf Palmisano left a couple of months ago to start his own business. Jeff Keeler (in our DC office) is covering John's issues. To: Steven J Kean/HOU/EES@EES cc: Subject: Thanks for the call this morning. The convention sounds interesting. On another note, I was wondering is John Palmisano still works here? for you? I got a call from a conference organizer about an emissions meeting in Cologne, Ger. and I think he has spoken at this gathering. I'll forward the email to you, and to the emissions/coal group as well to determine our interest. Regards. Jeff Message-ID: <19438086.1075846167206.JavaMail.evans@thyme> Date: Wed, 16 Aug 2000 01:53:00 -0700 (PDT) From: steven.kean@enron.com To: richard.shapiro@enron.com Subject: Re: Bill Massey Cc: joe.hartsoe@enron.com, james.steffes@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: joe.hartsoe@enron.com, james.steffes@enron.com X-From: Steven J Kean X-To: Richard Shapiro X-cc: Joe Hartsoe, James D Steffes X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf Probably not. Let's communicate Breathitt's interest to Bone and stay out of it for now. Richard Shapiro 08/16/2000 08:42 AM To: Steven J Kean/HOU/EES@EES cc: Joe Hartsoe/Corp/Enron@ENRON, James D Steffes/HOU/EES@EES Subject: Re: Bill Massey Is this the right time to weigh ? Steven J Kean 08/16/2000 06:56 AM To: Joe Hartsoe/Corp/Enron@ENRON cc: Richard Shapiro/HOU/EES@EES, James D Steffes/HOU/EES@EES Subject: Re: Bill Massey I believe we should back Massey as well. Who do we weigh in with now? Joe Hartsoe@ENRON 08/15/2000 08:27 AM To: Steven J Kean/HOU/EES@EES, Richard Shapiro/HOU/EES@EES, James D Steffes/HOU/EES@EES cc: Subject: Bill Massey Steve/Rick/Jim --- Talked to John Anderson yesterday. He had just gotten off the phone with Massey. Massey believes Linda B. is spending time at the White House lobbying to be Chair. Have we decided whether to back either and if so which? I would prefer backing Massey. Thoughts? JOE 202.466.9150 ---------------------- Forwarded by Joe Hartsoe/Corp/Enron on 08/15/2000 09:13 AM --------------------------- janderson on 08/14/2000 03:05:28 PM To: jhartso@enron.com cc: Subject: Bill Massey Joe, As you are probably aware, Jim Hoecker is considering leaving FERC relatively soon. The President will then name a new Chairman. Bill Massey is quite interested in receiving the nomination. Please call to discuss. John Message-ID: <15148534.1075846167727.JavaMail.evans@thyme> Date: Thu, 17 Aug 2000 00:59:00 -0700 (PDT) From: steven.kean@enron.com To: robbrnglsn@aol.com Subject: Gooooooooooood Bye! Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: RobBrnglsn@aol.com X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf Thanks for the note and congratulations. Sorry we didn't get a chance to talk before you left. But, I'm still here; give me a call when you get a chance - 1586. ---------------------- Forwarded by Steven J Kean/HOU/EES on 08/17/2000 07:56 AM --------------------------- Robert Bryngelson@AZURIX 08/16/2000 12:05 PM To: Kevin Kuykendall/HOU/ECT@ECT, Jeffery Ader/HOU/ECT@ECT, Ozzie Pagan/HOU/ECT@ECT, Donald M- ECT Origination Black/HOU/ECT@ECT, John Allario/HOU/ECT@ECT, Eva Pao/HOU/ECT@ECT, Brian O'Rourke/HOU/ECT@ECT, Steven J Kean/HOU/EES@EES, Laura Luce/HOU/ECT@ECT, Todd Busby/NA/Enron@Enron, Dax Sanders/HOU/AZURIX@AZURIX, Abrar Sait/HOU/AZURIX@AZURIX, Vinio Floris/HOU/AZURIX@AZURIX, Harold G Buchanan/HOU/EES@EES, Beverly Aden/HOU/EES@EES, Leticia G Smith/HOU/AZURIX@AZURIX cc: Subject: Gooooooooooood Bye! I just wanted to send you a quick note to let you know that I'm outta here! Today is my last day in the office here at Azurix, and in the coming months, I will start in a new position as SVP in the LNG development group at El Paso Energy. This happened very quickly, and I wanted to make sure that I let everyone know before I left. I don't have any contact information yet for my new job, but if you want to reach me, you can do so at RobBrnglsn@aol.com or at 713-664-7478. I enjoyed working with all of you during the past five years at Enron / Azurix, and I wish you all of the best. Take care. Rob Bryngelson PS -- There is a happy hour tonight at Scudeiros on Dallas Street (just west of the Met Garage) beginning around 5:00. If you can make it, please come! Message-ID: <22044190.1075846168727.JavaMail.evans@thyme> Date: Mon, 21 Aug 2000 00:53:00 -0700 (PDT) From: steven.kean@enron.com To: mark.schroeder@enron.com Subject: Response to voice mail Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Mark Schroeder X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf fyi ---------------------- Forwarded by Steven J Kean/NA/Enron on 08/21/2000 07:53 AM --------------------------- Joseph P Hirl 08/16/2000 05:39 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Response to voice mail Steve, Thanks for your voice mail the other day. Your memo certainly helped in better understanding the situation. Locally, we have not seen any additional articles on CA or on dereg, but will let you know if we do. I will also take onboard your other comments. I speak with Mark tomorrow to go over Nick's review. thanks, Joe Message-ID: <16698040.1075846169047.JavaMail.evans@thyme> Date: Mon, 21 Aug 2000 09:07:00 -0700 (PDT) From: steven.kean@enron.com To: chris.long@enron.com Subject: Re: CFTC call to Gramm Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Chris Long X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf Not yet. May not be until sept 5 as ken is on vacation. but there is a chance that ken will try to reach him in the meantime. I'll let you know when I hear. From: Chris Long 08/21/2000 03:22 PM Sent by: Amy Fabian To: Steven J Kean/NA/Enron@Enron cc: Subject: CFTC call to Gramm Steve - Missed you in LA last week. Thanks for working with Ken on the CFTC talking points. Do you know if the call between Ken and Sen. Gramm occured and if there was any follow up needed. Thanks - Chris Message-ID: <22102057.1075846171273.JavaMail.evans@thyme> Date: Mon, 28 Aug 2000 04:50:00 -0700 (PDT) From: steven.kean@enron.com To: marty.sunde@enron.com Subject: EES Organizational Announcement Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: quoted-printable X-From: Steven J Kean X-To: Marty Sunde X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf Congratulations! ---------------------- Forwarded by Steven J Kean/NA/Enron on 08/28/2000=20 11:49 AM --------------------------- Office of the Chairman From: Office of the Chairman on 08/28/2000 10:19 AM To: All Enron Worldwide cc: =20 Subject: EES Organizational Announcement Enron Energy Services has created explosive growth in the retail energy=20 business. To advance EES=01, leadership position and to rapidly expand the= =20 reach of its energy management services, the company is forming four new=20 business groups and promoting several key individuals. EES continues to see an ever-increasing demand for energy management servic= es=20 in North America, with interest coming from a growing number of customer=20 classes. EES North America, headed by Marty Sunde, President and CEO, has= =20 been established to bring outsourcing, commodity and mid-market solutions t= o=20 industrial and commercial customers in North America. Harold Buchanan and= =20 Jeremy Blachman have been named co-Chief Operating Officers of the group. EES Europe is responsible for energy outsourcing across Europe, as well as= =20 rapidly growing mid-market business (Enron Direct, Enron Directo) and heavy= =20 industrial business (ETOL). Matthew Scrimshaw, President and CEO will lead= =20 this group. As EES and Enron=01,s customer base grows, world class execution capabiliti= es=20 and customer relationship management skills are required to maximize value.= =20 Global Energy Services, headed by Dan Leff, President and CEO, is being=20 established to manage execution, delivery, operations & maintenance, accoun= t=20 / customer management and contract value enhancement of Enron=01,s asset an= d=20 energy outsourcing activities worldwide. This group will include Enron=20 Facility Services (EFS), led by Joe Earle, President & CEO and Operational= =20 Energy Corporation (OEC), led by Mark Dobler, Vice President. EES continues to see additional opportunities for business that will benefi= t=20 from the growth of its energy outsourcing business. To manage and develop= =20 these new business opportunities, EES New Business Ventures has been=20 created. Mark Muller, President and CEO will lead this group. All four new business leaders will report directly to EES=01, Office of the= =20 Chairman, Lou Pai, who will continue as Chairman, and Tom White, who will= =20 continue as Vice Chairman. In addition, Kevin Hughes, Vice President and= =20 Chief Accounting Officer, Vicki Sharp, Managing Director and General Counse= l,=20 and Beth Tilney, Managing Director of Marketing, HR and Customer Satisfacti= on=20 will continue to report to the Office of the Chairman. Please join us in congratulating these individuals. Message-ID: <12248408.1075846176365.JavaMail.evans@thyme> Date: Sun, 24 Sep 2000 10:31:00 -0700 (PDT) From: steven.kean@enron.com To: stephen.burns@enron.com Subject: Re: Fiber Optic Public Lands Right-of-Way Status Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Stephen D Burns X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf great news! Keep up the good work. Stephen D Burns To: Steven J Kean/NA/Enron@Enron, Richard Shapiro/HOU/EES@EES, James D Steffes/HOU/EES@EES cc: Joe Hillings/Corp/Enron@ENRON, Scott Bolton/Enron Communications@Enron Communications, Donald Lassere/Enron Communications@Enron Communications, Sue Nord/NA/Enron@Enron, Cynthia Sandherr/Corp/Enron@ENRON, Chris Long/Corp/Enron@ENRON Subject: Fiber Optic Public Lands Right-of-Way Status The fat lady hasn't quite sung yet, but I thought it would be a good idea to give you a readout on the current status of the BLM/USFS fiber optic right-of-way issue. In a nutshell, our strategy seems to have worked and we've won all the concessions we sought. As you'll recall these were: a) to get the BLM to withdraw any "interim" policies, the first of which split fiber cables into 144 different ROW certifications, and a later version that re-packaged the issue, mandating that ROW certificates be issued each time a fiber owner subleases or sells capacity on its line, with a retroactivity clause that added extra sting; b) to get the Forest Service to retract its May 2nd memorandum which changed its fiber optic ROW policy from published fee schedules to individual "comparable" assessments (the first such assessment, which compared ROW fees in urban centers in downtown Portland and Seattle to Oregon forest lands, increased the cost of a segment of our FTV fiber build 150 fold); c) to block both agencies from implementing any proposed or final rule in FY 2001; and d) to create an open rule making process that involves all interested stakeholders, including Enron. Thanks to the considerable pressure we orchestrated from Congress and the Administration, BLM Director Fry and USFS Chief Dombeck have backed away from points a and b above, and have agreed to points c and d. The language we inserted in the Interior Appropriations Bill, which has been agreed to by the Conferees, forces both agencies to revert back to the published fee schedules, prevents them from implementing any new policies in FY 2001, and forces them to work with industry and to come up with a common policy for future rent determination. The reference in the opening sentence to gravitationally-challenged women is because the issue still hasn't quite closed. The Interior Appropriations Bill may very well be vetoed. But since our issue was settled at the staff level, and is now off the table, we're likely to remain safe from being re-examined and challenged. In fact, any changes would likely only increase the strength of our hand: some members of our coalition are trying to insert even more detailed language in the report that prescribes exactly how the agencies will proceed to determine the new rental fee schedules over the next 18 months. Through outside consultants, we've had a series of constructive discussions with the agencies over the past two weeks that have forged agreements on timing and specific ways forward. Details are forthcoming, but Enron would be involved closely in the process. The agencies were clearly surprised by the clout we wielded, and are now more than willing to negotiate. But the bottom line, again, is that we have stopped both agencies from implementing their costly interim policies or launching a rule making process either now (which they originally intended to do) or in the coming fiscal year. And by engaging key Members of Congress and the White House, and organizing and leading the 20-member Fiber Optic Public Land Right-of-Way Coalition, we've succeeded in branding Enron as a leader in the communications field. Steve Message-ID: <31017467.1075846176809.JavaMail.evans@thyme> Date: Tue, 26 Sep 2000 09:48:00 -0700 (PDT) From: steven.kean@enron.com To: richard.shapiro@enron.com Subject: FERC "Linda Breathitt" Strategy Contact Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Richard Shapiro X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf Zausner is kind of a mixed bag. I think he's strong intellectually and has some influence, but I don't trust him to keep our strategy and contacts confidential. ----- Forwarded by Steven J Kean/NA/Enron on 09/26/2000 04:47 PM ----- Cynthia Sandherr 09/25/2000 03:16 PM To: Steven J Kean/NA/Enron@Enron, Richard Shapiro/HOU/EES@EES, Joe Hartsoe/Corp/Enron@ENRON, Sarah Novosel/Corp/Enron@ENRON, Tom Briggs/NA/Enron@Enron, Chris Long/Corp/Enron@ENRON cc: Joe Hillings/Corp/Enron@ENRON Subject: FERC "Linda Breathitt" Strategy Contact Today, I spoke with EPSA's outside counsel, Andy Zausner, about having his firm's Senior Counsel former Senator Wendell Ford (D-Ky, 1974-98) assist us with our FERC "Linda Breathitt" Strategy. Former Senator Ford knew Linda's father well plus has dinner with Linda every several weeks or so. There probably isn't anyone in Washington closer to Linda than Wendell as he has known her since she was a child. Andy is expecting either Steve's or Rick's phone call to further discuss the Senator's involvement. Andy did discuss in general that he wasn't certain whether his client, EPSA, would go along with the strategy but he thought, overall, it was a possibility. Andy's direct number is 202-828-2259. I know Andy and Wendell very well and would like to be helpful as you wish. However, at this point, I thought an EPSA board member (i.e. Steve or Rick) should follow up. thanks.Message-ID: <2358747.1075846182085.JavaMail.evans@thyme> Date: Mon, 16 Oct 2000 03:14:00 -0700 (PDT) From: steven.kean@enron.com To: maureen.mcvicker@enron.com Subject: Pipeline safety legislation - update Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Maureen McVicker X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf print ----- Forwarded by Steven J Kean/NA/Enron on 10/16/2000 10:17 AM ----- Jeffrey Keeler 10/13/2000 12:28 PM To: Stanley Horton/Corp/Enron@Enron, Phil Lowry/OTS/Enron@ENRON, John Shafer/OTS/Enron@Enron, Shelley Corman/ET&S/Enron@ENRON, David L Johnson/OTS/Enron@ENRON, Louis Soldano/ET&S/Enron@ENRON, Colleen Raker/ET&S/Enron@ENRON, Michael Terraso/OTS/Enron@ENRON, Steven J Kean/NA/Enron@Enron, Richard Shapiro/NA/Enron@Enron, Joe Hillings/Corp/Enron@ENRON, Cynthia Sandherr/Corp/Enron@ENRON, Chris Long/Corp/Enron@ENRON, Clayton Seigle/HOU/ECT@ECT cc: Subject: Pipeline safety legislation - update Since the defeat of the Senate pipeline safety legislation earlier this week in the House, we have been working on strategies related to action that could occur before the end of the congressional session. The following developments indicate that the legislation is still very much in play, but our primary concerns are making sure efforts going forward remain under control and preventing the passage of legislation that goes too far. Developments: House Republican leadership is not interested in pursuing the legislation any further, either through regular procedures or as an attachment to appropriations, "omnibus" or other must-pass measures. They are somewhat angry at the industry for not being able to fight off advances made by Reps. Dingell and Oberstar, who were able to persuade enough Democrats to vote against the Senate bill so that it fell short of the 2/3 needed for passage under suspension of the rules. Senate bill sponsors/supporters are extremely angry at House Democrats for killing the Senate legislation, and at the White House/DOT for not strongly promoting the Senate bill (which they previously had supported) and reigning in House Democrats. Senator Patty Murray called the White House and expressed her concern, which prompted a series of meetings between staff for Senate and House Democrats and the White House to discuss a solution. In these meetings, House Democrats have proposed adding several provisions from the Dingell/Oberstar legislation to the Senate bill and moving that package on an omnibus or appropriations bill. Sources close to Rep. Dingell indicate that they really do not want any bill at all, and are merely keeping up the pressure in an effort to see if they can get the Senate or industry to accept tougher provisions. Senate Democrats (including Murray, Bingaman, and Breaux) are not accepting any possible amendments to the original Senate bill, and are opposed to changing the Senate bill at all. However, Senator Murray and Republican Senator Slade Gorton (who has a tough election) both want to continue to pursue the Senate bill (unamended) as a rider to an omnibus/appropriations bill. The White House is looking to cover itself from a poor performance in the House, and is considering drafting an executive order that could be issued if no legislation passes at all. It is unclear what could or would be contained in such an order, but the White House is indicating to Senate staff that it would be more like the Senate bill than the House bill. We are working with sources close to the White House to confirm their strategy. Strategy going forward: Upon hearing that some industry associations were on Capitol Hill discussing "what industry could live with" in terms of provisions added to the Senate bill, I insisted (along with El Paso and others) that we not take such an approach, but rather remain consistent in our approach -- we support the Senate bill and only the Senate bill. It was approved unanimously in the Senate and by 60% of the House, and if anything moves forward on an omnibus/appropriations bill, it should be the Senate bill. Consistent with what our Senate friends are doing, we should not even recognize the Dingell/Oberstar legislation as a serious proposal, nor start accepting pieces of it as a compromise. We will be shoring up support for our position of "if anything moves forward, it should be the Senate bill only" with Senate supporters and leadership in the House and Senate. We will also be working to thank the 51 Democrats who supported us in the House, and make sure they have any cover they need in case their vote becomes an issue. In support of Senator Gorton's election troubles, we will be working to try to get media placement of op-eds that support the efforts he has waged and make sure the House Democrats shoulder the blame for the bill's defeat. In particular, we are hopeful that Senator McCain (who has been passionate about this issue) will write op-eds that can be placed to support Gorton and others in tough races who supported the Senate bill. Congress' state of confusion over omnibus/appropriations bills and last minute politics causes the legislative activity to be extremely fluid and subject to change rapidly, so we will have no real certainty until the session is over (which now could be as late as October 20). I will keep you posted as changes and developments occur. JeffMessage-ID: <10325230.1075847572405.JavaMail.evans@thyme> Date: Thu, 7 Jun 2001 11:07:00 -0700 (PDT) From: steven.kean@enron.com To: jane.wilson@enron.com Subject: Re: Notice Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Jane Wilson X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf Please call before you leave and please send me your contact information when you have it for your new job. thanks Jane Wilson@ENRON_DEVELOPMENT 05/30/2001 07:31 AM To: Wade Cline/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Neil McGregor/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Steven J Kean/NA/Enron@Enron cc: Richard Shapiro@Enron, Sue Nord@Enron, Anthony Duenner@ENRON COMMUNICATIONS, Rebecca McDonald/Enron@EnronXGate, Sandip Malik/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Bob Sparger/Corp/Enron@Enron, Scott Gilchrist/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT Subject: Notice After almost 13 years with Enron, I've decided to pursue other opportunities outside of the company. While the problems in India remain challenging and I have enjoyed my tenure here, the job I've been offered is really too good to pass up. Thus, please consider this e:mail as formal notice of my intention to resign from the company, effective close of business June 16, 2001. Message-ID: <25789789.1075847578389.JavaMail.evans@thyme> Date: Thu, 24 May 2001 00:51:00 -0700 (PDT) From: steven.kean@enron.com To: sarah.novosel@enron.com Subject: Re: Presidential Power Question Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Sarah Novosel X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf thanks From: Sarah Novosel on 05/23/2001 02:54 PM To: Richard Shapiro/NA/Enron@Enron, Steven J Kean/NA/Enron@Enron, James D Steffes/NA/Enron@Enron cc: Linda Robertson/NA/Enron@ENRON Subject: Presidential Power Question I spoke with Donna Bobbish this morning about Steve's question -- does the President have broader authority to take action during times of crisis. Donna sent me this quick write up about what she has looked into so far. Because these questions go beyond a FERC practitioner's expertise, we asked Donna to work with a Constitutional Law expert at V&E to determine whether, and under what circumstances, the President's authority may be extended beyond the authorities discussed in the memo. We will let you know what we learn from that further research. Sarah ----- Forwarded by Sarah Novosel/Corp/Enron on 05/23/2001 03:48 PM ----- "Bobbish, Donna J." 05/23/2001 12:16 PM To: "'snovose@enron.com'" cc: Subject: Presidential Power Question Sarah: In response to Steve's inquiry, I did look into this question briefly when you first gave me the assignment. I read an interesting law review article on "The Imposition of Martial Law in the United States," for a discussion of presidential powers. There is no general emergency authority granted the President in the U.S. Constitution. Also, the article discussed the famous "Truman steel mills case," Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579 (1952), in which the Supreme Court declared unconstitutional President Truman's seizure of the steel mills during the Korean War. In that case, in light of a threatened national-wide strike in the national steel industry, President Truman, concerned about the national defense, issued an Executive Order directing the Secretary of Commerce to take possession of most of the steel mills and keep them running. The Supreme Court said that if the President had authority to take such an action, he had to derive it either from an act of Congress or the Constitution itself. Since the Supreme Court could not find any seizure authority, it invalidated the President's action. The Supreme Court also rejected the argument that the President had any powers that could be implied from the aggregate of his powers under the Constitution. Based on the Truman steel mills case, I thought it the wiser course of action to look for specific authorities given to the President by statute which might prove useful. I could look into this question further, if you would like, but we would be entering "martial law-type" legal territory, where the President would be acting outside of specific Constitutional or congressional authority (which has been described a "zone of twilight"), and in light of the Truman steel mills case, I don't know how fruitful that might be. Please let me know if you would like me to do anything more. Thank you. Donna ++++++CONFIDENTIALITY NOTICE+++++ The information in this email may be confidential and/or privileged. This email is intended to be reviewed by only the individual or organization named above. If you are not the intended recipient or an authorized representative of the intended recipient, you are hereby notified that any review, dissemination or copying of this email and its attachments, if any, or the information contained herein is prohibited. If you have received this email in error, please immediately notify the sender by return email and delete this email from your system. Thank You Message-ID: <31218520.1075847578460.JavaMail.evans@thyme> Date: Thu, 24 May 2001 00:42:00 -0700 (PDT) From: steven.kean@enron.com To: jeannie.mandelker@enron.com Subject: Re: eBiz article on Bush energy plan Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Jeannie Mandelker X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf Looks good to me. I'm glad you had the chance to work with Linda. Jeannie Mandelker@ECT 05/23/2001 03:31 PM To: Karen Denne/Corp/Enron@ENRON, Linda Robertson/NA/Enron@ENRON, Steven J Kean/NA/Enron@Enron cc: Subject: eBiz article on Bush energy plan Linda, thanks for making time for me today. This is the eBiz article we'd like to run Friday. I need your comments by noon tomorrow. You can e-mail them back or reach me at 3-6305. Thanks, Jeannie Message-ID: <32574222.1075847578483.JavaMail.evans@thyme> Date: Thu, 24 May 2001 00:37:00 -0700 (PDT) From: steven.kean@enron.com To: richard.shapiro@enron.com Subject: TACT Conference Speaker Request Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Richard Shapiro X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf This looks like a run-of-the-mill conference except that the guest list is fairly senior. Any interest? If not, let Amy know. ---------------------- Forwarded by Steven J Kean/NA/Enron on 05/24/2001 07:35 AM --------------------------- Amy Buehler @ EES 05/23/2001 03:46 PM To: Steven J Kean/NA/Enron@Enron cc: Elizabeth Tilney/HOU/EES@EES Subject: TACT Conference Speaker Request Steve, Attached is information about a conference sponsored by the Association of Energy Services Professionals International (AESP) taking place this August. We received a request for an EES Executive speaker for the Symposium, but felt that it would be more appropriate for an Executive from Corporate to consider speaking here. There are Executives from companies such as The New Power Company, Cinergy and Entergy committed to speaking at the event. More information can be found in the document below. Please let me know if you have questions or comments. Thank you, Amy Buehler 713.853.7635 Message-ID: <27270309.1075847580577.JavaMail.evans@thyme> Date: Thu, 17 May 2001 04:29:00 -0700 (PDT) From: steven.kean@enron.com To: dlpits@yahoo.com Subject: Re: NASCAR Craftsman Truck Series Proposal Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Lorna Clark X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf Thank you for the information. Unfortunately, we are not interested at this time. Lorna Clark on 05/16/2001 08:59:39 PM To: Steve Kean cc: Subject: NASCAR Craftsman Truck Series Proposal Steve: Approximately 3 weeks ago we sent you a Sponsorship proposal for Ware Racing. We are curious if you've had the time to look our package over. We have tried unsuccessfully to reach you by phone and understand that you are very busy. If you have time, would you please contact us reguarding this matter. You can reach us by phone or fax at (905) 680-1568 or on the net at dlpits@yahoo.com. We look forward to hearing from you. Thank-you, Dave/Lorna Clark Allied Motorsports (representing WARE Racing) __________________________________________________ Do You Yahoo!? Yahoo! Auctions - buy the things you want at great prices http://auctions.yahoo.com/ Message-ID: <2254484.1075847580989.JavaMail.evans@thyme> Date: Wed, 16 May 2001 06:38:00 -0700 (PDT) From: steven.kean@enron.com To: nicholas.o'day@enron.com Subject: Jeff on CNN Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Nicholas O'Day X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf fyi -- further distribute this message as you see fit. ---------------------- Forwarded by Steven J Kean/NA/Enron on 05/16/2001 01:37 PM --------------------------- Karen Denne 05/15/2001 09:07 PM To: Steven J Kean/NA/Enron@Enron cc: Vance Meyer/NA/Enron@ENRON Subject: Jeff on CNN fyi... ---------------------- Forwarded by Karen Denne/Corp/Enron on 05/15/2001 08:54 PM --------------------------- Vance Meyer 05/15/2001 06:47 PM To: Sherri Sera/Corp/Enron@ENRON, Joannie Williamson/Corp/Enron@ENRON cc: Karen Denne/Corp/Enron@ENRON, Mark Palmer/Corp/Enron@ENRON, Meredith Philipp/Corp/Enron@ENRON, Ann M Schmidt/Corp/Enron@ENRON Subject: Jeff on CNN Here are the scheduled times for Jeff's "The Players" segment on "Business Unusual," the taping he did for Arthur Anderson. Vance CNN Sunday, May 20th 5:30 Central (a.m. and p.m.) CNNfn Monday, 5/21 - Friday, 5/25 7:00 p.m. & 10:30 p.m. Central CNN international Europe: Saturday, 5/19: 1130 CET Sunday, 5/20: 1930 CET Asia: Saturday, 5/19: 1030 HK Sunday, 5/20: 1630 HK Latin America: Saturday, 5/19: 930 BA Sunday, 5/20: 1030 BA Message-ID: <18426608.1075847581188.JavaMail.evans@thyme> Date: Tue, 15 May 2001 19:07:00 -0700 (PDT) From: steven.kean@enron.com To: rebecca.mcdonald@enron.com Subject: RE: Kissinger Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Rebecca McDonald X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf I'm envious. See you when you get back From: Rebecca McDonald/ENRON@enronXgate on 05/15/2001 08:21 AM To: Steven J Kean/NA/Enron@Enron cc: Subject: RE: Kissinger We're going to be two ships passing here. I leave town on Friday and return to the office on Wednesday morning. How about I give you a call when I get back. I am only in a few days and then I am heading to DC for my son's college graduation exercises. ( I know exactly what you are thinking - Lordy, she's old!!) Talk to you then, okay? Rebecca -----Original Message----- From: Kean, Steven Sent: Sunday, May 13, 2001 7:44 PM To: McDonald, Rebecca Subject: Re: Kissinger Sorry, I got overwhelmed by California. I have not talked to Ken yet and will be in Japan until Friday. Perhaps we can hook up then? From: Rebecca McDonald/ENRON@enronXgate on 05/11/2001 02:46 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Kissinger Steve, We never closed the loop on Kissinger. If you are around next week, why don't we talk and resolve what we want to do so that I can proceed? Does that work for you? Rebecca Message-ID: <19367921.1075847581373.JavaMail.evans@thyme> Date: Tue, 15 May 2001 11:48:00 -0700 (PDT) From: steven.kean@enron.com To: linda.robertson@enron.com Subject: HELP!!! Cc: sherri.sera@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: 7bit Bcc: sherri.sera@enron.com X-From: Steven J Kean X-To: Linda Robertson X-cc: Sherri Sera X-bcc: X-Folder: \Steven_Kean_June2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf Linda - I haven't heard of these guys. Do you know them? ---------------------- Forwarded by Steven J Kean/NA/Enron on 05/15/2001 06:47 PM --------------------------- Enron Capital & Trade Resources Corp. From: Sherri Sera 05/15/2001 04:19 PM To: Steven J Kean/NA/Enron@Enron, Mark Palmer/Corp/Enron@ENRON cc: Subject: HELP!!! Steve and Mark, a good friend of mine works for Mr. Grimes at Stewart & Stevenson. They have been offered this opportunity by the China Assoc. for Social and Economic Development for a commitment of $74,000. Since Mr. Lay has been a past recipient (according to their attached letter), they are wondering if this is legit. Can you provide any insight? Thanks for your help. SRS ---------------------- Forwarded by Sherri Sera/Corp/Enron on 05/15/2001 04:12 PM --------------------------- Doyleene Harris on 05/15/2001 03:32:30 PM To: "'sherri.sera@enron.com'" cc: Subject: HELP!!! Hi Sherri, We would be most appreciative if you can help us out on this one! Our President and CEO, Mike Grimes, received the letter (copy attached/please open) from the China Association for Social and Economic Development.? In this letter, Mr. Wu mentions that Dr. Kenneth Lay was a past recipient. Well, you just called - so I won't complete this email! Love you - Doyleene -----Original Message----- From: Judy Johnson Sent: Tuesday, May 15, 2001 2:58 PM To: Doyleene Harris Subject: ? <<~MAP0000.jpg>> - ~MAP0000.jpg Message-ID: <13881087.1075847582172.JavaMail.evans@thyme> Date: Sun, 13 May 2001 13:20:00 -0700 (PDT) From: steven.kean@enron.com To: jane.tholt@enron.com Subject: Re: Stock Options Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Jane M Tholt X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf Sorry for the delay. I have asked the question and should have an answer in a day or two. . . . don't do anything rash in the meantime. Jane M Tholt@ECT 05/07/2001 12:15 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Stock Options Hi Steve. I know you are extremely busy but I was just wondering if you found out about whether the 3 year period apllies to all options or just the ones in that program. Question 2) does the 3 year time frame apply to only options that are vested at the time of departure or does it apply also to options which vest over the 3 year time frame. I look forward to hearing from you. Thank you. Message-ID: <2591892.1075847582243.JavaMail.evans@thyme> Date: Sun, 13 May 2001 13:05:00 -0700 (PDT) From: steven.kean@enron.com To: john.hardy@enron.com Subject: Re: USG overtures on Dabhol Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: John Hardy X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf Thanks for the update. From: John Hardy@ENRON_DEVELOPMENT on 05/10/2001 09:48 AM To: Rebecca McDonald/Enron@EnronXGate cc: Ben Glisan@ECT, Steven J Kean/NA/Enron@Enron, Rob Walls/ENRON@enronXgate Subject: USG overtures on Dabhol Rebecca At a meeting yesterday at OPIC on Trakya, another of our problem projects, Dabhol was raised. A representative from the White House transition team joined the conversation. I was asked the terms under which we were prepared to negotiate and I told them at a minimum upon a commitment by the Indian authorities to serious negotiations which would include full compliance with the terms of the contracts and progress in the reform of the MSEB. I made clear that we do not see the Godbole Committee as the basis for such a discussion. I think the USG wants to be on record politically encouraging the Indian Govt. to engage in discussions all parties consider to be meaningful in hopes of working things out before it is too late, even while through OPIC and EXIM it is supporting the move towards PNT. The administration may be concerned that without such a diplomatic overture on its part it could be concluded that the USG has politically taken a position on the project. In Trakya, for example, the USG has been quite proactive in pressing the Turkish govt on the payments issue and even in discussing the payment concerns with the IMF so that the payments issues for the BOTs (two of the four in Turkey are US sponsored) are taken into account as the IMF program moves forward. So I anticipate that the USG will shortly be meeting with the Indian ambassador here and the US Charge in Delhiwill likely be directed to make the rounds and meet with senior government officals on the project. I wanted you to be aware of this; also any guidance you can provide would be helpful. Thanks John Message-ID: <7159110.1075847582315.JavaMail.evans@thyme> Date: Sun, 13 May 2001 12:55:00 -0700 (PDT) From: steven.kean@enron.com To: maureen.mcvicker@enron.com Subject: Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Maureen McVicker X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf I have opened a new Lotus file "California - working group" where I am keeping the contact information, but I am assuming you have picked everybody up already. If in doubt, check out the file. thanksMessage-ID: <10835781.1075847595615.JavaMail.evans@thyme> Date: Thu, 19 Apr 2001 00:41:00 -0700 (PDT) From: steven.kean@enron.com To: nicholas.o'day@enron.com Subject: Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Nicholas O'Day X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf I got a voicemail response from Jeff - he is fine with me substituting for him on the Japan trip.Message-ID: <27332964.1075847598527.JavaMail.evans@thyme> Date: Sun, 15 Apr 2001 13:15:00 -0700 (PDT) From: steven.kean@enron.com To: mark.schroeder@enron.com Subject: Re: Details - follow up (back) Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Mark Schroeder X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf Thanks for handling. Let me know if it begins to interfere unduly with your new responsibilities. Mark Schroeder@ECT 04/12/2001 04:23 AM To: Mike Dahlke/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT cc: Jo Ann Hill/Corp/Enron@ENRON, Steven J Kean/NA/Enron@Enron Subject: Re: Details - follow up (back) Thanks. I am seeing a few things through to conclusion, and I expect this situation to be one, unless Steve prefers to handle it differently. I think it is a matter of either him or me, and I think this is one item I can keep off of his plate. thanks mcs Mike Dahlke@ENRON_DEVELOPMENT 11/04/2001 14:41 To: Mark Schroeder/LON/ECT@ECT cc: Subject: Re: Details - follow up (back) Mark, Congratulations on your new assignment. It has been a long time since I have dealt with Coal but the business desperately needed new ideas and approaches when I knew it. Good luck! Yes, I did meet with JoAnn last Friday. As required by the agreement she gave me, I have retained counsel and the proposal is being reviewed by my attorney. In light of the announced change, I am wondering if questions and comments should still be addressed to you? Please advise. Mike D. Message-ID: <4467870.1075847601884.JavaMail.evans@thyme> Date: Tue, 10 Apr 2001 03:26:00 -0700 (PDT) From: steven.kean@enron.com To: dee.madole@enron.com Subject: Rick Shapiro Presentation (Updated) Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Dee Madole X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf ---------------------- Forwarded by Steven J Kean/NA/Enron on 04/10/2001 10:25 AM --------------------------- Richard Shapiro 04/10/2001 10:10 AM To: Steven J Kean/NA/Enron@Enron cc: Subject: Rick Shapiro Presentation (Updated) ---------------------- Forwarded by Richard Shapiro/NA/Enron on 04/10/2001 10:10 AM --------------------------- Ginger Dernehl 03/29/2001 04:45 PM To: Lauren Urquhart/LON/ECT@ECT cc: Richard Shapiro/NA/Enron@Enron Subject: Rick Shapiro Presentation (Updated) Lauren, Mr. Shapiro has updated his presentation. Can you make sure that this version is available to him for Monday's meeting? Also, will his presentation be saved on a computer for his use or does he need to have it on a "CD/diskette"? Thanks gngr 713-853-7751 Message-ID: <17786050.1075847602198.JavaMail.evans@thyme> Date: Tue, 10 Apr 2001 00:27:00 -0700 (PDT) From: steven.kean@enron.com To: sherri.sera@enron.com Subject: Re: organizational announcement Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Sherri Sera X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf I talked with Ken yesterday. He would like to keep David on until May 15 to finish up some things he is working on for Ken. Enron Capital & Trade Resources Corp. From: Sherri Sera 04/09/2001 08:45 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Re: organizational announcement Just out of curiosity, did this ever get resolved? Apologies if I'm being too bold! SRS From: Steven J Kean on 03/14/2001 07:33 AM To: Sherri Sera/Corp/Enron@ENRON cc: Subject: Re: organizational announcement Ken was meeting with him the day before yesterday. I'm just waiting to hear back. Sherri Sera 03/13/2001 10:07 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: organizational announcement Just saw the memo about Sanjay, Diomedes and Jim. Guess David Haug is still around? SRS Message-ID: <29844831.1075847615102.JavaMail.evans@thyme> Date: Thu, 29 Mar 2001 00:06:00 -0800 (PST) From: steven.kean@enron.com To: linda.robertson@enron.com Subject: Job well done Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Linda Robertson X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf ----- Forwarded by Steven J Kean/NA/Enron on 03/29/2001 08:05 AM ----- Peter E Weidler 03/26/2001 08:16 AM To: Steven J Kean/NA/Enron@Enron cc: Subject: Job well done Your DC team - Hillings and then Briggs were instrumental in pressuring the Bolivian Government to pass new transportation regulations. It looks like the regulations are 90 % ok - and better than the old ones. - your team got the right pressure points and applied them well. Thanks PeteMessage-ID: <22787440.1075847615675.JavaMail.evans@thyme> Date: Tue, 27 Mar 2001 19:42:00 -0800 (PST) From: suzanne_nimocks@mckinsey.com To: skean@enron.com Subject: California Power Crisis Update (No. 10) Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: X-To: SKean@enron.com X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf We have been pulling together these weekly(sometimes more often) summaries for internal purposes. Would you find it helpful to be on the distribution list? Hope you are doing well. Look forward to touching base soon. ----- Forwarded by Suzanne Nimocks/HOU/NorthAmerica/MCKINSEY on 03/28/2001 03:41 AM ----- Memorandum TO: Pru Sheppard BCC: Suzanne Nimocks FROM: Pru Sheppard B. Venki Venkateshwara DATE: March 27, 2001 California Power Crisis Update (No. 10) DEVELOPMENTS THIS WEEK, 3/23/2001 The weeks highlights include: ? Continued indications that the issue of market power and possible remedies for it is likely to remain a high profile issue in California and elsewhere (both retroactively and prospectively) ? An ironical situation with respect to QFs in which QF power under contract is effectively being released into the market at higher prices ? A court order requiring Reliant to continue to sell power to the ISO even if it is not being paid in a full and timely manner ? Another Stage 3 emergency and rolling blackouts Market power There are continued indications that the issue of market power will not be settled simply. This week there was a lengthy and politically influential front page story in the New York Times about FERCs passive approach to policing generators (Critics Say U.S. Energy Agency Is Weak in Oversight of Utilities). The story was by Jeff Gerth and Joseph Kahn. (Jeff Gerth's 1992 story on the Whitewater deal is viewed by journalists to have been the origin of what eventually became a multi-year investigation of Bill Clinton.) The key issues are familiar: ? Does market power exist to a degree that warrants remedies such as price caps, refunds, and so on? ? If so, what is the basis for asserting that market power exists and what is the remedy? (See the discussion in the New York Times article on the "good hours" vs. "bad hours" approach and the associated political decision not to deal with "good hours"). ? Can market power be used as leverage to eventually settle generator bills in California at something less than 100 cents on the dollar. (The California ISO filed a complaint claiming $6 billion in overcharges this week.) The QF irony Through the 1990s, QF contracts were projected to be the source of stranded costs because they were priced "way above market." In recent months, in California, they look like a bargain (although some are not such great bargains because a portion of their price is tied to gas). You would think that the utilities would request QFs to maximize their output. But credit problems have created an ironical situation. The facts: ? PG&E and Edison have not been paying the QFs fully and promptly for some time. ? The QFs form a creditors committee and threaten to push PG&E and Edison into bankruptcy. (Some gas-fired QFs had to shut down because they did not have money to pay for the gas.) ? Last week's court decision allows MidAmerican/CalEnergy to essentially sell its power to others even though the QF contract "dedicates" the output to the purchasing utility. ? CalEnergy does so immediately, selling to El Paso. The Reliant Order A court ordered Reliant to continue to sell to the ISO, when requested, regardless of whether Reliant had been paid fully and promptly for past deliveries to the ISO. Reliant announced it will appeal the order. This is somewhat of a contrast to the QF situation except that the circumstances governing the 2 situations are probably different. The QF contracts pre-date the ISO and are with the utilities and most likely make no reference to providing power during emergencies. In fact, many QF contracts have the opposite provision: authority for the utility to cut takes during so-called "light load" periods. Stage 3 emergency and rolling blackouts--again There was another Stage 3 emergency in California ? with rolling blackouts this week. This prompted everyone to wonder why this was happening in March. Among the factors: ? Increased demand from summer-like temperatures ? Cutbacks in imports ? Loss of 1400 MW due to a transformer fire at an Edison plant ? Loss of about 3100 MW from QF plants that were forced to shutdown because they could not afford gas bills (VV) MARKET COMMENTARY (For easier printing of all the articles in this section use the file at the end of the section) Critics Say U.S. Energy Agency Is Weak in Oversight of Utilities By JEFF GERTH and JOSEPH KAHN 03/23/2001 The New York Times Page 1, Column 1 c. 2001 New York Times Company WASHINGTON, March 22 -- The pressure was intense when federal regulators met privately last month to debate remedies for soaring electricity prices in California. Officials of the Federal Energy Regulatory Commission, the agency whose mandate is to ensure ''just and reasonable'' electricity rates nationwide, had evidence that a few companies had been selling electricity to California at prices far above the cost of generating it. The agency faced an imminent deadline to challenge those prices or let the companies possibly pocket hundreds of millions of dollars in unfair profits. An internal memorandum laid out two choices. The agency could audit and punish ''bad actors,'' the companies that were exploiting the market. Or it could identify ''bad hours,'' when electricity shortages were most acute and spiking prices were arguably nobody's fault, and order refunds for only the most exorbitant prices. ''It may be easier to identify bad hours than bad actors,'' the memorandum said. The commission took the easier way. It decided not to investigate reports of abuses by companies, but issued an order that could require them to refund to the state utilities up to $124 million collected during a relatively few ''bad hours'' in January and February. That is hundreds of millions of dollars less than California might have claimed, since the most potential overcharging occurred during ''good hours,'' when power was more plentiful but prices were often just as extreme. The order ignored those hours. Today, in a criticism of the agency's lack of aggressiveness, California regulators estimated that generators had charged $6.2 billion above competitive levels over 10 months. They urged the agency to dig deeper, hoping it would demand more refunds or other stiff remedies. But the agency's track record -- one of complacency in the eyes of state officials -- leaves California regulators skeptical that Washington will confront the big power producers. The small, obscure agency, tucked behind the rail yard of Union Station here, has largely soft-pedaled its role as the electricity industry's top cop, even though it has wide authority to keep power companies in line. To keep rates reasonable, it can impose price caps, strip companies of the right to charge market rates, force them to return excessive profits and even suspend deregulation altogether. Instead, the agency has largely left it to private companies to pry open the $250 billion electricity industry, which has historically been controlled by monopoly utilities and state officials. The agency's defenders, including its chairman, Curt Hebert Jr., a fierce advocate of unfettered markets, say that its largely hands-off approach reflects the delicate balancing of competing interests -- a commitment to protect consumers while not stifling market forces. But politicians, utility executives, energy economists and local regulators say California's rolling blackouts and skyrocketing electricity prices are the signs of a market running amok. They accuse the agency of standing aside as companies manipulate their way to windfall profits. The agency's critics, who include one of its own commissioners and numerous staff members, say that its enforcement mission has been blunted by free-market passions and the influence of industry insiders in its ranks. When the agency began its first national investigation of high electricity prices last year, it named a newly recruited industry insider, Scott Miller, to lead the effort. Mr. Miller and his colleagues said in their report that there was ''insufficient data'' in California to prove any profiteering by generating companies. Yet his own former employer, PG&E Energy Trading, was at the time a subject of a civil antitrust investigation by the Justice Department that focused on electricity market abuses in New England. The agency has given state regulators a lead role in monitoring local power markets. Yet even as these regulators have urged the agency to be more aggressive in investigating suspicions that companies have abused their power in California, New England, the Midwest and the mid-Atlantic, they have frequently been ignored or rebuffed. Critics say that the agency began deregulation before it was ready or willing to make sure the markets worked effectively. They accuse it of showing favoritism to industry -- allowing companies, for example, to ignore requirements to file detailed reports of market transactions that are critical to proving accusations of market abuses. ''We need to wake up to the fact that this is a dysfunctional market that is being gamed and manipulated by those who participate in it,'' said William Massey, a commissioner of the agency who has become one of its leading critics. The agency's inaction, the critics say, leads to ''gaming'' -- jockeying for profits that does not necessarily involve illegality -- and outright market manipulation. Consumers and utilities are the victims, paying billions of dollars more for electricity than if the markets were truly competitive. Agency officials acknowledge that enforcement of market rules to curb gaming and manipulation had not been a high priority in previous years. But they defended their recent California order as proof that they intend to keep markets free of abuse. They add that the agency is also pressuring two generators to refund almost $11 million for possibly manipulating the California market last spring. Agency officials and some outside analysts say that poorly conceived deregulation plans by states, a shortage of power plants, rising natural gas prices, and even the weather have had more impact on electricity prices than abuses by companies or any failings by the agency. They say the agency must balance the competing interests of generators, local regulators and utility companies if it is to keep deregulation on track. ''We're trying to craft a system that gives breathing room to develop a market, but not so much room that undue market power punishes consumers,'' Mr. Hebert said. Fight Over Deregulation Today's debate traces back to the 1930's, when President Franklin D. Roosevelt backed legislation to break up utility monopolies. The Federal Power Act of 1935 gave the Federal Power Commission a mandate to ensure ''just and reasonable'' electricity rates. The Federal Power Commission was abolished in 1977 and replaced by the Federal Energy Regulatory Commission, an independent agency with 1,200 employees that also oversees oil pipelines and the natural gas market. The president appoints the chairman and four commissioners -- two Democrats and two Republicans with staggered terms of five years. Two Republican seats are currently unfilled. The deregulation of the electricity markets began in the late 1980's, after the agency had begun opening the gas markets. By 1996, the commissioners issued a landmark order that forced utility companies to open their transmission lines to other utilities and electricity wholesalers. The commission and many private economists expected that by prying open protected markets, electricity prices would immediately fall. That possibility set off a deregulation frenzy, most prominently in California, New York, New England and the mid-Atlantic states. Generating companies rushed to expand in the new, borderless market. But the agency's balancing act has grown more difficult as electricity deregulation has spread nationwide. Congress has forced it to trim its staff in recent years. Officials complain that investigating abuses in electricity markets strains their resources. And as the California crisis has worsened, the commissioners have begun sparring publicly among themselves about what to do. This week, Mr. Massey, a Democratic commissioner, and Mr. Hebert (pronounced AY-bear), a Republican, sat side by side before a House panel and argued diametrically opposed positions. Mr. Hebert said high prices in California ''were sending the right signals to get supply there.'' Mr. Massey called the prices that generators were charging ''unlawful'' and said that his agency, by not reining them in, ''is simply not doing its job.'' The agency's leadership has been in flux for months. Congressional and industry officials in Washington say President Bush is considering replacing Mr. Hebert, whom he named to the top post less than two months ago, with Pat Wood, who runs the Texas public utility commission. A White House spokeswoman had no comment on the reports. Though Mr. Hebert's positions are not far from those of the Bush administration, his relations with California leaders may have made his position tenuous. Mr. Hebert, a Mississippian who is a close ally of the Senate majority leader, Trent Lott, has warred with California politicians who have proposed new solutions to the crisis there. Mr. Hebert, who has served as a commissioner since 1997, has often taken the most ideologically free-market position of any commissioner. He flatly rejects the idea of price caps on electricity as hopelessly ineffective and contrary to market forces. When Gov. Gray Davis outlined a plan to have the state buy transmission lines to relieve utility companies' debt, Mr. Hebert's response was dismissive. ''It's not in the interest of the American public,'' he pronounced. Even as new electricity markets opened in the summer of 1999, they started producing nasty shocks. The mid-Atlantic region experienced some early volatility. As the turmoil grew, economists began raising the alarm about a phenomenon called ''market power,'' the ability of energy traders in the new national market to sustain prices above the competitive level. Proving such abuses is difficult, because it requires comparing tens of thousands of separate electricity transactions with the costs of the generators that initiated them. Joseph Bowring, who heads the market monitoring unit of the nonprofit entity that operates the mid-Atlantic transmission system, said that power companies there had exercised some market power. But only the Federal Energy Regulatory Commission, not local regulators, had the authority to collect the data to determine how much market power had been exercised and whether it had been abusive or not, he said. Mr. Bowring said he talked to agency officials about doing so. In the end, Mr. Bowring and several agency officials said, the agency chose not to investigate. The decision roiled some agency officials. Ron Rattey, a veteran agency economist, wrote a memorandum last June describing the staff as ''impotent in our ability to monitor, foster, and ensure competitive electric power markets.'' The staff, the memorandum said, did not even enforce a requirement that power companies file detailed quarterly reports listing essentially every sale they make. Such data would have been useful to Mr. Bowring. Local-Federal Clash Local regulators who want to ensure competitive prices often have to act on their own. Monitors in New England have intervened about 600 times since 1999 to correct prices they determined had been caused, at least in part, by market manipulation. The federal agency has sometimes chastised them for interfering too much. The industry, not surprisingly, shares that view. One vocal critic was Mr. Miller. Before the agency recruited him last July to head its division of energy markets, he was director of policy coordination for the national energy-trading unit of PG&E Corporation, the California holding company whose assets also include Pacific Gas and Electric, the California utility. Although the utility has lost billions of dollars during California's crisis, Mr. Miller's former unit has become one of the most profitable new energy traders nationwide. PG&E Energy Trading, by several estimates, is now the second-largest seller of electricity in New England. The company has had a rocky relationship with regulators. They intervened several times in 1999 and 2000 to retroactively cancel auctions they said produced excessive profits for PG&E and other companies. Mr. Miller denounced the practice, though he acknowledged in public testimony that his company sometimes charged ''very high'' prices when it could. ''One person's predatory pricing is another person's competitive advantage,'' Mr. Miller said at a public hearing on deregulation in Texas in 1999. New England regulators too often acted as ''judge, jury and executioner'' when overseeing the market, he said. One year later, Mr. Miller and his new colleagues at the federal agency got a chance to examine New England's problems from the regulators' perspective. Their Nov. 1 report attributed New England's frequent price gyrations to technical and regulatory flaws. As Mr. Miller's team was preparing its report, the Justice Department, whose threshold for stepping into possible industry wrongdoing is far higher than the agency's, began looking into whether price spikes in New England pointed to unlawful monopoly power or collusion, people contacted by the department during that inquiry said. One subject of the civil inquiry is possible price manipulation in one of New England's ancillary services markets, people contacted by the department said. They said the department was examining whether PG&E and two other companies tried to corner that market for several months early last year. PG&E confirmed that the Justice Department had contacted it, but denies wrongdoing and says it has cooperated with the department's requests. Mr. Miller has declined to comment on his role at PG&E or at the agency. His supervisors defended his work and said they had detected no conflict of interest between his work at PG&E and his duties at the agency. Those duties brought Mr. Miller to California last August. With electricity prices there soaring, he and his colleagues sat down with several utility executives at the agency's San Francisco office. One executive, Gary Stern, director of market monitoring for Southern California Edison, wanted the agency to stop what he suspected were market abuses by power generators. He provided a road map to help investigators figure out how power companies traded power contracts -- and whether they had manipulated the markets. But when Mr. Miller and his team approached 11 generators and marketers -- including his old employer -- a few weeks later, they did it their way. They asked eight questions, many of them imprecise, like: ''Describe your strategy for bidding generation resources into market.'' This question, Mr. Stern said in a recent interview, ''was equivalent to asking a suspected burglar how he spent his day.'' Some agency officials also thought the team should probe deeper. Mr. Rattey recommended that Mr. Miller seek the quarterly pricing reports that marketers were supposed to file. But his suggestion was not adopted, agency records show. Daniel Larcamp, Mr. Miller's supervisor, said ''there might have been more information that could have been obtained'' in the California inquiry. But he said the commission gave the staff only three months to finish, making it impossible to collect and analyze the reams of data involved. For Mr. Miller, agency documents show, the investigation was so time-consuming that he had no time to fill out the financial disclosure form required of new federal employees. Mr. Miller submitted his form in late January, after a reporter requested it. Agency lawyers approved the form, but only after he provided additional information about his job and compensation from PG&E. The lawyers said Mr. Miller's participation had been permissible because PG&E was not the subject of the investigation. When the staff report was issued on Nov. 1, it found high prices and problems in the design of the California market. But while the companies ''had the potential to exercise market power,'' the commission said, there was ''insufficient data'' to prove that they did. Some marketers saw the report as an exoneration. ''This has been looked at several times, most notably by the FERC and nobody has found any evidence of market manipulation and profiteering,'' Rob Doty, the chief financial officer of Dynegy Inc., told a reporter earlier this year. California Inquiry The agency has recently shown signs of wanting to apply pressure on generators. But its early efforts show how it is treading on new and uncertain turf. When the California crisis grew severe last December, the commission issued a refund order, a shot across the bow for generators charging high prices. It required them to submit detailed data any time they sold electricity in California for more than $150 per megawatt hour, considered at the time a fair estimate of the highest costs any of them faced. It also told generators that for the next several months, they could be forced to give refunds if the agency found that they had charged excessive prices. The commission also said that it would examine bidding practices and strategies for withholding generating capacity to ferret out any efforts to artificially raise prices. When the agency's own 60-day deadline for examining market data in January approached, however, it became clear that staff members had not made any detailed examination. Instead, staff members said, the agency scrambled to forge a last-minute compromise that would allow it to issue a statement opposing high prices in the state without a time-consuming investigation. During this scramble, a senior staff member, Kevin Kelly, suggested focusing on bad hours instead of bad actors. ''Our attempts to find illegal behavior or legal 'misbehavior' by sellers ('bad actors') always seems to fail,'' his memorandum said. It said that the agency could more easily blame high prices on acute shortages during the most critical hours. The suggestion won the day. The commission decided to limit its order to the hours when California declared a Stage 3 emergency, when supplies are critically low. Mr. Stern of Southern California Edison and several private-sector economists have attacked the economic logic of that order. They said that the commission has focused on times when prices might be legitimately high. The bigger worry: Generators can and often do sustain artificially high prices when supplies are not as tight, they say. Mr. Massey, the Democratic commissioner, dissented from the decision for those reasons. Because most high-priced transactions in January and February did not occur during bad hours, he argued, the commission effectively chose to bless as ''just and reasonable'' the hefty profits generators are making from the California crisis. ''The problem with my agency is that we're so carried away with the rhetoric of markets that we've gotten sloppy,'' Mr. Massey said. ''We're talking about electricity. It's the juice of the economy, so it's got to be available and reasonably priced.'' Williams defends pricing of electricity 03/23/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. TULSA, Okla. (AP) - Williams Cos. Inc. says it can justify the rates it charged for wholesale power, despite accusations from federal regulators that it sold over-priced electricity to California. Federal regulators claim Williams Energy Marketing and Trading Co., a unit of Tulsa-based Williams, owes California more than $40 million in refunds for power it sold to the state's Independent System Operator. The Federal Energy Regulatory Commission says that Williams is one of several power providers responsible for $124 million in overcharges from transactions in January and February. The Independent System Operator, which manages the state's power grid, claims the state was overcharged $6.2 billion by 21 wholesale power providers, including Williams, between May and February. Williams says the rates it charged California were fair and were based on production costs and market conditions. "Williams is confident that it performed within the guidelines established by the ISO," said Williams spokeswoman Paula Hall Collins. "We felt like we had worked within the regulations set up by ISO." According to the commission, power prices levied by Williams in January and February exceeded federal price ceilings based on the cost of natural gas and other market conditions. However, the price ceilings were established after the ISO accepted Williams' power prices, Collins said. The commission will review Williams' explanation and either accept the justification or order the company to pay refunds. Allegheny Energy makes big California connection 03/23/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. HAGERSTOWN, Md. (AP) - Allegheny Energy Inc. said Thursday it has agreed to sell $4.5 billion worth of power to California's electricity-purchasing agency over the next 10 years. The company said the contract call for Allegheny to provide up to 1,000 megawatts that the Hagerstown-based company has secured from western generating plants through its new energy trading division, Allegheny Energy Global Markets - formerly Merrill Lynch Global Energy Markets. "This is a win-win for both the state of California and Allegheny Energy. It provides a long-term source of fixed-price energy and should help to stabilize prices in California," said Michael P. Morrell, president of the Allegheny Energy Supply division. Allegheny Energy is the parent of Allegheny Power, which delivers electric energy and natural gas to parts of Maryland, Ohio, Pennsylvania, Virginia and West Virginia. Williams plans expansion of pipeline to help power Calif. 03/23/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. SALT LAKE CITY (AP) - The Williams Cos. plans to expands its Kern River pipeline, which runs through Utah, to provide more natural gas for generating plants in California. Williams' gas pipeline unit in Salt Lake City said Thursday that it plans to construct nearly 700 miles of additional pipeline that will run parallel to its existing Kern River line. Construction on the $1 billion project is expected to begin next year and is scheduled for completion in May 2003, said Kirk Morgan, director of business development for Kern River pipeline. "Shippers are seeking more access to natural gas from the Rocky Mountain basin, where producers are aggressively stepping up production," Morgan said. The new pipeline is expected to deliver about 900 million cubic feet of natural gas per day to markets in Utah, Nevada and California. Most of the gas will be used for generating plants planned in California. If all of the pipeline's capacity were used to generate electricity, it could produce about 5,400 megawatts. "That is enough to light around 4.5 million homes," Morgan said. The original Kern River line was completed in 1992. It enters Utah from Wyoming then crosses into the Salt Lake Valley near Bountiful. It turns south near the Salt Lake City International Airport then runs the length of the state before passing into southern Nevada and winding up near Bakersfield, Calif. It currently transports 700 million cubic feet of natural gas per day. Williams, based in Tulsa, Okla., recently filed an emergency application with federal regulators to install additional pumping stations on the line to increase its capacity by 135 million cubic feet per day. That $81 million pumping station project should be completed by July 1. During the 2002 construction period, the Kern River project will employ between 1,500 and 1,800 people. The company estimates annual property taxes it pays to Utah counties will increase from $3.5 million to about $7 million. Questar will be one of the customers on the new pipeline, Morgan said. The utility wants to supply additional gas to southern Utah cities, including St. George and Cedar City. "Our own pipelines serving southern Utah are at full capacity so this is an opportunity to transport additional gas into those areas from company-owned supplies in Wyoming," said Questar Gas spokeswoman Audra Sorensen. Calif Energy Commission OKs 3 Pwr Plants Worth 2,076 MW 03/23/2001 Dow Jones Energy Service (Copyright (c) 2001, Dow Jones & Company, Inc.) (This article was originally published Thursday) LOS ANGELES -(Dow Jones)- The California Energy Commission Wednesday approved three power plants worth 2,076 megawatts, two of which are scheduled to come on line by the end of 2002, a CEC spokesman said Thursday. The plants approved include BP Amoco PLC (BP) unit ARCO Western Energy's 500 megawatt Western Midway Sunset Project, slated to come on line in October 2002; Caithness Energy's 520 MW Blythe Power Plant, to come on line by Dec. 31, 2002; and Thermo Ecotek's 1,056 MW Mountainview Power Plant, scheduled to come on line in April 2003. All three of the new plants will be natural gas-fired combined-cycle plants. The $550 million Mountainview plant will be located in Southern California, near San Bernadino. The $300 million Western Midway-Sunset plant will be located in central Kern County, while the $250 million Blythe plant will be located in the city of Blythe in Riverside County. The latest approvals bring to 13 the total number of plants approved since April 1999 by the CEC, a spokesman said. Those plants will supply 8,405 MW to the state, which has seen rolling blackouts and spiking wholesale power prices in the last six months, in part due to lack of supply. -By Jessica Berthold, Dow Jones Newswires; 323-658-3872; jessica.berthold@dowjones.com Some CalEnergy Power Could Be Sold Outside Calif - CEO 03/23/2001 Dow Jones Energy Service (Copyright (c) 2001, Dow Jones & Company, Inc.) (This article was originally published Thursday) LOS ANGELES -(Dow Jones)- Some of CalEnergy Operating Corp's power could end up being sold outside of California, though that is not the company's intent, CalEnergy Chairman and CEO David Sokol said in a conference call Thursday. CalEnergy, an affiliate of MidAmerican Energy Holdings Co, which is majority owned by Warren Buffett's Berkshire-Hathaway (BRKA), was given legal authority Thursday to suspend 270 megawatts of power delivery to Edison International (EIX) utility Southern California Edison and sell on the open market, because SoCal Edison has not paid its bills since November. CalEnergy stopped supplying power to SoCal Ed immediately following the court ruling. "We stopped supplying power at 1 PM (PST) and have been selling to parties that will pay since then....We are selling it to marketers; our current marketing agent is El Paso Corp (EPG) and they will sell it for us," Sokol said. Sokol added that while it was his company's intention to have its power sold to California, that could not be guaranteed. "We leave the energy selling to El Paso....We've directed them that we would like the power to stay in California but we can't stop them," from selling out of state, Sokol said. Wholesale prices on the open market are about $400-$500 a megawatt-hour, three times more than what the company had received under its contract with SoCal Ed. The court's ruling did not address the $45 million SoCal Ed still owes CalEnergy for November and December power, and Sokol said that his company's separate lawsuit on that matter sought to attach the utility's assets as payment for that debt. Sokol said the court's ruling had "significant implications" for the entire community of small, independent generators, known as qualifying facilities or QFs, who have not received payment from SoCal Ed. "Edison's own lawyer said it best....that every QF in the state will begin to mitigate if the judge allowed us (to sell on the open market)," Sokol said. Sokol said his company was prepared to push SoCal Ed into involuntary bankruptcy Friday if CalEnergy hadn't won the case, but said he couldn't speculate whether other QFs may be more or less inclined to do so as a result of the court outcome. A group of renewable power suppliers, owed more than $100 million from SoCal Ed, said late Wednesday they want state lawmakers to release them for their supply contracts with PG&E Corp. (PCG) unit Pacific Gas & Electric and SoCal Ed until the utilities are restored to financial stability. The utilities claim close to $13 billion in undercollections due to an inability to pass high wholesale power costs to customers under a rate freeze. In a statement, SoCal Ed said it opposed CalEnergy's bid to suspend its QF contract because the utility believed Gov. Gray Davis and state regulators are close to resolving "very legitimate financial concerns of CalEnergy and other QF suppliers." SoCal Ed said it was concerned that CalEnergy's request to sell to third parties would lead to a major supply shortage in California. The utility said it has informed the QFs that it is working to resolve the issue without giving unfair advantage to one class of creditors. While many of the state's large power suppliers have been paid by on a forward basis for the power they sell into California, the QFs, which make up one-third of the state's total power supply, haven't been paid by SoCal Ed since November. PG&E has made partial payments to its QFs. -By Jessica Berthold, Dow Jones Newswires; 323-658-3872, jessica.berthold@dowjones.com (Jason Leopold contributed to this article.) California and the West Judge Frees Small Firm From Edison Contract KEN ELLINGWOOD; DAN MORAIN TIMES STAFF WRITERS 03/23/2001 Los Angeles Times Home Edition A-3 Copyright 2001 / The Times Mirror Company El CENTRO -- California's balance of electrical power shifted slightly Thursday when an Imperial County judge temporarily freed a small geothermal energy producer from its contract with Southern California Edison, allowing it to sell power on the open market. The ruling by Superior Court Judge Donal B. Donnelly could lead to a mass exodus by hundreds of small energy producers that have been selling power to the state's financially troubled utilities for months without getting paid. At the same time, it may have staved off plans by a group of the small generators to send Edison into involuntary bankruptcy as early as today. In Sacramento, energy legislation pushed by Gov. Gray Davis passed in the state Senate but foundered in the Assembly. The measure was intended to ensure that the state gets repaid for the electricity that it has been buying on behalf of Edison and Pacific Gas & Electric, which say they lack the cash and credit to purchase power. The bill also was supposed to guarantee that the small, alternative energy producers--which together provide nearly a third of the state's power--get paid. But Assembly Republicans opposed it, saying it hadn't been given sufficient scrutiny. The impact of the small producers was made clear in Imperial County, where Edison's failure to pay CalEnergy, the county's biggest property taxpayer, had outsize implications. CalEnergy had put county officials on notice that it was about to miss a $3.8-million property tax payment. The uncertainty had prompted the tiny Calipatria Unified School District to postpone a bond issue for badly needed school repairs. Among CalEnergy Chairman David Sokol's first acts after the judge's ruling Thursday was to promise Imperial County Supervisor Wally J. Leimgruber that the company would pay its property taxes on time. "That is great news," Leimgruber said. Within hours of its court victory, CalEnergy had stopped transmitting geothermal power to Edison and begun selling it to El Paso Energy, a marketing company that purchased the energy at prevailing rates and resold it on the spot market. Some of the more than 700 other small energy producers in the state said they were considering similar action against Edison and Pacific Gas & Electric. "We absolutely need the right to sell to third parties," said Dean Vanech, president of Delta Power, a New Jersey company that owns five small gas-fired plants in California and is owed tens of millions of dollars by Edison. Sokol praised the Imperial County judge and said his company simply wanted the authority to sell its power "to a credit-worthy company that, in fact, pays for the power." An Edison spokesman said the company was disappointed with the ruling, but sympathized with CalEnergy and other small producers because "California's power crisis has placed [them] in financial distress, just as it has placed utilities in financial distress." Edison expressed concern that the ruling would prompt CalEnergy and other small producers to sell their power out of state. Sokol said CalEnergy had specifically told El Paso Energy that it hoped its power would remain in California, "but if someone wants to pay a higher price out of state, we can't stop them." Sokol said that Edison still owes CalEnergy $140 million and that the company--along with seven other small producers--had been prepared to file a petition in federal bankruptcy court in Los Angeles today forcing the utility into involuntary bankruptcy. He said his company no longer intends to do so, and he believed--but wasn't certain--that the other companies would shelve their plans. Edison filed papers Thursday with the federal Securities and Exchange Commission showing that it owed $840 million to various small electricity producers, many of which rely on renewable energy sources such as geothermal steam, solar energy or wind. The alternative energy producers--and utilities--strenuously objected to the legislation considered in Sacramento on Thursday. The bill, spelling out how the utilities are to pay the state and the small producers, passed the Senate on a 27-9 vote, the exact two-thirds margin required. But it stalled in the Assembly on a 46-23 party-line vote, well short of two-thirds. "When I was a citizen back in Lancaster, I heard these stories about pieces of legislation that were cooked up late at night, that . . . were cut and pasted together and were rammed through by the Legislature," Assemblyman George Runner (R-Lancaster) said. "That's exactly what we have before us." The alternative electricity generators, including oil companies, warned that they would lose money under the Davis proposal, while representatives of Edison and PG&E, which have amassed billions in debt in the worsening energy crisis, said the legislation would push them deeper into the hole. "There isn't enough money," Edison attorney Ann Cohn testified at a Senate hearing on the bill Thursday. "It is a very simple question: Dollars going out cannot be greater than dollars coming in." The bill, AB 8X, combined several proposals. First, it sought to clarify earlier legislation by spelling out that Edison and PG&E must pay the state all money collected from consumers for electricity that the state has been buying. Additionally, the bill would turn over to the California Public Utilities Commission the thorny issue of how much to pay alternative energy producers for their electricity. Wind, solar and geothermal producers might agree to the prices offered by the administration. But most of the alternative energy producers, including Chevron and British Petroleum, use natural gas to generate electricity through "cogeneration," a process of creating steam for both electric generation and heat. With natural gas prices high, they contend, they would lose money at the prices Davis is offering. * Ellingwood reported from El Centro, Morain from Sacramento. Times staff writers Mitchell Landsberg in Los Angeles and Jenifer Warren, Nancy Vogel and Carl Ingram in Sacramento contributed to this story. (BEGIN TEXT OF INFOBOX / INFOGRAPHIC) Power Points Background The state Legislature approved electricity deregulation with a unanimous vote in 1996. The move was expected to lower power bills in California by opening up the energy market to competition. Relatively few companies, however, entered that market to sell electricity, giving each that did considerable influence over the price. Meanwhile, demand has increased in recent years while no major power plants have been built. These factors combined last year to push up the wholesale cost of electricity. But the state's biggest utilities--Pacific Gas & Electric and Southern California Edison--are barred from increasing consumer rates. So the utilities have accumulated billions of dollars in debt and, despite help from the state, have struggled to buy enough electricity. * Daily Developments * Overcharges by major electricity suppliers were estimated at $6.3 billion, up from the $5.5 billion first thought, California's power grid operator said. * Electricity producers denied that they have profiteered and argued that Cal-ISO's figures don't take into account all their costs. * A Superior Court judge's ruling Thursday freeing a small producer from its contract with Edison could lead to a mass exodus by small energy producers that have been selling to the utilities without getting paid. * Verbatim "If these guys have such high costs ... how come they're making so much money?" --Gary Stern, Edison's director of market monitoring and analysis, referring to power producers Complete package and updates at www.latimes.com/power Grid Operator Says California Paid Too Much for Power By Rebecca Smith and John R. Emshwiller Staff Reporters of The Wall Street Journal 03/23/2001 The Wall Street Journal A2 (Copyright (c) 2001, Dow Jones & Company, Inc.) California's electric-grid operator said power suppliers may have overcharged the state and its utilities by $6.2 billion, or a total of 30%, in a 10-month period, and has asked federal regulators to step up their policing of electricity markets. Meanwhile, a California state judge handed down a decision involving small power producers that could result in more electricity being made available in the energy-starved state, but likely at greater cost to the state government. The $6.2 billion figure was contained in a market analysis by the California Independent System Operator filed yesterday with the Federal Energy Regulatory Commission. The ISO says it isn't seeking a refund -- for the May through February period -- because its analysis lacked important market data. For example, it estimated costs for 21 suppliers based on published prices for natural gas, not on specific data showing what each generator actually paid for the fuel. "We don't know how much gas actually was purchased at spot-market prices," said Anjali Sheffrin, the ISO's head of market analysis. Charles Robinson, general counsel for the ISO, said FERC needs to become "more aggressive about market-power mitigation." The ISO's filing, he said, was intended to push the agency in that direction, since FERC is responsible for policing deregulated electricity and natural-gas markets. He said that if the FERC doesn't act, the state of California may find ways to discipline the market, such as through the state attorney general's office. The attorney general has been investigating the state's electricity market for many months but hasn't brought any court action. Dynegy Inc., a big owner of power plants in California, said it will provide additional information to FERC supporting its position that the prices it has charged for power have been "just and reasonable." The Houston company was one of 13 energy suppliers that the FERC this month ordered to pay refunds totaling $124 million or "show cause" why it should be excused. Dynegy said the FERC analysis was flawed, because it used "inaccurate" prices for natural gas and pollution credits. While big power producers such as Dynegy came under attack, small power producers won a potentially significant victory in a state court in Southern California's Imperial County. A judge granted 10 geothermal plants operated by the CalEnergy Co. unit of MidAmerican Energy Holdings Co., a unit of Berkshire Hathaway Inc., of Omaha, Neb., permission to suspend deliveries of electricity to Southern California Edison Co. and instead seek other buyers. These plants, known as "qualifying facilities," are under long-term contract to Edison and other utilities but haven't been paid for months. Edison, a unit of Edison International, of Rosemead, Calif., says it has been unable to pay hundreds of millions of dollars in power bills to CalEnergy and others because it has been driven to the brink of insolvency by the state's failed utility-deregulation plan. While the CalEnergy case involves only about 320 megawatts of power, the repercussions could be far greater. Collectively, hundreds of qualifying facilities, or QFs, produce as much as 30% of California's electricity needs. QFs totaling 3,000 megawatts cut their production in recent weeks for lack of payment. This loss of output was a significant cause of the blackouts that hit California this week. Observers believe the CalEnergy court decision could give other QFs an opportunity to sell power in the open market, presumably to the state government that now is California's biggest energy buyer. An hour after the court decision yesterday, some 400 megawatts of power came back into the market, the ISO said. However, additional QF power sales on the open market could substantially increase the state's tab. Already, the state has allocated more than $4 billion for electricity purchases. Separately, Edison said in a Securities and Exchange Commission filing that its unpaid power bills could contribute to a write-off of as much as $2.7 billion for 2000. Because of uncertainty caused by the energy crisis, the company hasn't yet reported year-end earnings. Power regulators debate who should be exempted from blackouts By KAREN GAUDETTE Associated Press Writer 03/22/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. SAN FRANCISCO (AP) - State power regulators said Thursday they are working to exempt all California hospitals, regardless of size, from rolling blackouts. The Public Utilities Commission met with representatives from hospitals and investor-owned utilities after Los Angeles lawyer David Huard filed an emergency motion with the PUC on behalf of more than 500 hospitals throughout the state. Under PUC rules, hospitals with more than 100 beds are exempt from losing electricity during power emergencies. But during rolling blackouts Monday, at least a dozen hospitals from Long Beach to Clearlake were forced to use their backup generators. Pacific Gas and Electric Co. and Southern California Edison Co. say they blacked out those hospitals specifically because they have backup generators. Both utilities said the temporary blackouts were part of their overall efforts to spread the burden of blackouts over more of their customers. Linda Ziegler, director of business and regulatory planning for SoCal Edison, said the utility is following state law and will implement new guidelines if the PUC changes them. But hospitals say there is a 10-second lapse before emergency generators kick in, which could harm patients in the midst of delicate surgical procedures such as organ transplants or brain surgery. "You wouldn't fly a plane with only your emergency backup systems in place," said Ann Mosher, a spokeswoman for California Pacific Medical Center in San Francisco. "Backup generators are just that, they're not designed to keep the hospital up and running at full capacity." Ziegler said that power still goes out for reasons beyond the energy crisis, from incidents like lightning or a knocked-down power pole. "If it's a serious problem for the hospital it's certainly something they should be address just from an ongoing basis," she said. The exemption would cover all hospitals within the territory of the state's investor owned utilities PG&E, Southern California Edison and San Diego Gas and Electric. Hospitals within the range of municipally owned utilities, such as the Los Angeles Department of Water and Power, are separately regulated. For more than two decades, prisons, hospitals with more than 100 beds and emergency services such as fire and police departments have been classified as "essential" services, and are exempted from blackouts by order of state power regulators. After rolling blackouts began darkening the state in January, many other public service groups began seeking relief from power interruptions, including transit systems, schools and water districts. --- On the Net: http://www.cpuc.ca.gov Federal Judge Orders Reliant To Keep Selling Pwr To Calif 03/22/2001 Dow Jones Energy Service (Copyright (c) 2001, Dow Jones & Company, Inc.) SACRAMENTO, Calif. (AP)--A federal judge issued a preliminary injunction Wednesday ordering a major electricity wholesaler to continue selling to California despite its fear that it will not get paid. U.S. District Judge Frank C. Damrell Jr. said Californians were at risk of irreparable harm if Reliant Energy (REI) stopped selling power to the Independent System Operator, which oversees the state's power grid. The ISO buys last-minute power on behalf of utilities to fill gaps in supply. Damrell dismissed Reliant's attempt to force the state Department of Water Resources to back the ISO's purchases for the state's two biggest utilities. The state has been spending about $50 million a day on power for Pacific Gas and Electric Co. and Southern California Edison, both denied credit by suppliers after amassing billions of dollars in debts. The judge said he had no authority to force the DWR to pay for that power. Gov. Gray Davis has said the state isn't responsible for purchasing the costly last-minute power ISO buys for Edison and PG&E, despite a law authorizing state power purchases on the utilities' behalf. ISO attorney Charles Robinson said the ruling gives ISO operators "a tool to assist them in keeping the lights on in California." "Had the decision gone the other way, one could expect other generators to simply ignore emergency orders," Robinson said. Damrell's preliminary injunction will remain in effect until the Federal Energy Regulatory Commission rules on the matter. Damrell denied the ISO's request for preliminary injunctions against three other wholesalers - Dynegy Inc. (DYN), AES Corp. (AES) and Williams Cos. (WMB) - which agreed to continue selling to the ISO pending the FERC ruling. Spokesmen for Reliant, Dynegy, AES and Williams were out of the office Wednesday night and didn't immediately return calls from The Associated Press seeking comment on the ruling. The ISO went to court in February after a federal emergency order requiring the power sales expired. The judge then issued a temporary restraining order, requiring the sales, but dropped it after the suppliers agreed to continue sales to California pending his Wednesday ruling. The ISO said it would lose about 3,600 megawatts if the suppliers pulled out, enough power for about 2.7 million households. One megawatt is enough for roughly 750 homes. Grid officials said Reliant's share alone is about 3,000 megawatts. Reliant said the amount at issue actually is less than a fourth of that, because most of its output is already committed under long-term contracts. Reliant, which currently provides about 9% of the state's power, worries it won't get paid due to the financial troubles of PG&E and Edison. PG&E and Edison say that together they have lost about $13 billion since June due to soaring wholesale electricity costs that California's 1996 deregulation law bars them from passing onto customers. Calif Small Pwr Producers To Shut Plants If Rates Capped By Jason Leopold Of DOW JONES NEWSWIRES 03/22/2001 Dow Jones Energy Service (Copyright (c) 2001, Dow Jones & Company, Inc.) LOS ANGELES -(Dow Jones)- Many of California's independent power producers late Wednesday threatened to take their small power plants offline this week if state lawmakers pass legislation that would cap the rates the generators charge for electricity they sell directly to the state's three investor-owned utilities. At issue is a bill that would repeal a section of the state's Public Utilities Code, which links the 688 so-called qualifying facilities' electricity rates to the monthly border price of natural gas. Lawmakers, however, are poised to pass the legislation. State regulators are then expected to approve a measure that would restructure the fluctuating rates the QFs charge PG&E Corp. (PCG) unit Pacific Gas & Electric, Edison International (EIX) unit Southern California Edison, and Sempra Energy (SRE) unit San Diego Gas & Electric from $170 a megawatt-hour to $69-$79/MWh, regardless of the price of natural gas. Whereas each of the 688 QF contracts differed, largely because natural gas prices are higher in Southern California than Northern California, the state wants the QFs to sign a general contract with the utilities. The cogeneration facilities, which produce about 5,400 megawatts of electricity in the state, said the rates are too low and they won't sign new supply contracts with the utilities. "For $79/MWh, natural gas would have to be $6 per million British thermal unit at the Southern California border," said Tom Lu, executive director of Carson-based Watson Cogeneration Company, the state's largest QF, generating 340 MW. "Our current gas price at the border is $12.50." Other gas-fired QFs said the state could face another round of rolling blackouts if lawmakers and state regulators pass the legislation, which is expected to be heard on the Senate floor Thursday, and allow it to be implemented by Public Utilities Commission next week. Lu, whose company is half-owned by BP Amoco PLC (BP) and is owed $100 million by SoCal Ed, said the proposals by the PUC and the Legislature "will only make things worse." David Fogarty, spokesman for Western States Petroleum Association, whose members supply California with more than 2,000 MW, said the utilities need to pay the QFs more than $1 billion for electricity that was already produced. State Loses 3,000 MW QF Output Due Of Financial Reasons The QFs represent about one-third, or 9,700 MW, of the state's total power supply. Roughly 5,400 MW are produced by natural gas-fired facilities. The rest is generated by wind, solar power and biomass. About 3,000 MW of gas-fired and renewable QF generation is offline in California because the power plant owners haven't been paid hundreds of millions of dollars from cash-strapped utilities SoCal Ed and PG&E for nearly four months. Several small power plant owners owed money by SoCal Ed have threatened to drag the utility into involuntary bankruptcy if the utility continues to default on payments and fails to agree to supply contracts at higher rates. The defaults have left many of the renewable and gas-fired QFs unable to operate their power plants because they can't afford to pay for the natural gas to run their units. Others continue to produce electricity under their contracts with the state's utilities but aren't being paid even on a forward basis. The California Independent System Operator, keeper of the state's electricity grid, said the loss of the QF generation was the primary reason rolling blackouts swept through the state Monday and Tuesday. Gov. Gray Davis, recognizing the potential disaster if additional QFs took their units offline, held marathon meetings with key lawmakers Monday and Tuesday to try and hammer out an agreement that would get the QFs paid on a forward basis and set rates of $79/MWh and $69/MWh for five and 10 year contracts. He also said he would direct the PUC to order the utilities to pay the QFs for power they sell going forward. "After next week the QF problem will be behind us," Davis said Tuesday. "We want to get the QFs paid...the QFs are dropping like flies...and when that happens the lights go out." But this just makes the problem worse, said Assemblyman Dean Florez, D-Shafter, a member of the Assembly energy committee. "I don't know how we are going to keep the lights on," Florez said in an interview. "Many of these congenerators are in my district. They said if the legislation doesn't change they are going offline. This compounds the issue of rolling blackouts, especially now when we need every megawatt." Davis, who didn't meet with people representing the QFs, said he was handing the QF issue to the PUC because lawmakers failed to pass legislation that would have set a five-year price for natural gas and allow the QFs to sign individual contracts with the utilities. In addition, SOCal Ed opposed the legislation, saying the rates should be below $50/MWh. Some renewable power producers said they aren't vehemently opposed to the new rate structure because it guarantees them a higher rate than what was originally proposed. QFs Want Third Party Supply Contracts John Wood, who represents the SoCal Ed Gas Fired Creditors Committee, one of a handful of groups that have formed since January to explore options on getting paid by the utilities, said his group of gas-fired QF creditors want to be released from their supply contracts and sell to third parties. "Under our plan, we would be permitted to sell electricity to third parties (including the state Department of Water Resources) until a resolution to the crisis can be accomplished," wood said. Hal Dittmer, president of Sacramento-based Wellhead Electric in Sacramento, which is owed $8 million by PG&E, has 85 MW of gas-fired generation units offline. Under the state's plan, Dittmer said he risks going out of business. "I can't buy natural gas for what I would be paid under this decision," he said. "The state needs to quit kidding themselves that they don't need to raise electricity rates. All of this is being driven by an artificial construct that California can avoid raising rates." -By Jason Leopold, Dow Jones Newswires; 323-658-3874; jason.leopold@dowjones.com Power Strain Eases but Concerns Mount Energy: Officials say summer prices will be high, and a state report shows that contracts with generators are far short of goals. DAN MORAIN; JENIFER WARREN TIMES STAFF WRITERS 03/22/2001 Los Angeles Times Home Edition A-3 Copyright 2001 / The Times Mirror Company SACRAMENTO -- California's fragile electricity system stabilized Wednesday, but a Davis administration report suggested troubles ahead because the state could be forced to buy most of its power for the coming summer on the costly and volatile spot market. After two days of statewide blackouts, power plants that had been shut down were cranked up. Unseasonable heat tapered off. The operators of the statewide power grid relaxed their state of emergency. But plenty of ominous signs remained. Many small producers remained shut down, skeptical about Gov. Gray Davis' plan for utilities to pay them. State Controller Kathleen Connell issued a sharp warning about the high cost of the state's foray into the power business and announced that she will block an administration request that she transfer $5.6 billion into an account that could be tapped to pay for state purchases of electricity. And a report from the administration summarizing contracts between Davis and independent power generators showed that the state has signed contracts for only 2,247 megawatts of electricity, significantly less than the 6,000 to 7,000 megawatts previously claimed. While there are agreements in principle for the full amount, the report notes that generators can back out of the contracts for a variety of reasons, including the state's failure to sell bonds to finance power purchased by July 1. The Legislature has approved plans to sell $10 billion in bonds, but none have yet been issued. "We are exposed enormously this summer," Senate Energy Committee chairwoman Debra Bowen (D-Marina del Rey) said after looking at the report. "We owe the people the truth about how difficult this summer is going to be. We don't have a power fairy." Perhaps most significant, the report suggests that the contracts fall significantly short of Davis' stated goal of buying no more than 5% of the state's summer needs on the spot electricity market, where prices can be many times those of long-term contracts. After reading the report, Frank Wolak, a Stanford University economist who studies the California electricity market, said the numbers suggested that the state's long-term contracts will cover less than half of what the state will need this summer. "We're definitely short this summer, next summer and the summer of 2003," he said. California was forced to start buying electricity in December--at a cost of $50 million a day--because producers refused to sell to Southern California Edison and Pacific Gas & Electric. The two utilities amassed billions of dollars in debt when prices for wholesale power soared on the spot market. Vikram Budhraja, a consultant retained by Davis to negotiate deals with generators, said the report represents a "work in progress." He said the state may yet sign new contracts. However, Wolak said the contract figures confirm what he and others have been dreading: that summer is going to be rife with rolling blackouts unless serious steps to cut demand are taken immediately. Wolak and other experts say large industrial customers must be switched to real-time meters and pricing to persuade them to use the bulk of their energy at times of low demand. The head of the Energy Foundation, a San Francisco-based nonprofit that promotes sustainable sources of power, made the same proposal to Davis on Wednesday. "The government need not ask customers to swelter in the dark this summer," foundation President Hal Harvey argued in a letter. He also proposed a crash campaign to boost sales of efficient appliances and lightbulbs. He said the state needs to take over the utilities' contracts with alternative energy providers to ensure they stay in business, and sign new contracts for 1,500 megawatts of new wind power--the cheapest, fastest and cleanest source of new supply. Davis had proposed a formula Tuesday to force private utilities to pay the alternative producers, some of which have not been paid since November. But some of them warned Wednesday that Davis' plan offers them little incentive to turn on their generators. Alternative energy producers supply more than a quarter of the electricity consumed in California. Many producers generate electricity from wind, sun and geothermal sources. But most of them generate power using natural gas--and the cost of natural gas has been soaring. Several natural gas users said Davis' plan, which caps rates, won't cover their fuel costs. Davis assumes that the price of natural gas will fall. But small generators say they don't have sufficient purchasing power or sophistication to gamble on future prices. The Public Utilities Commission is expected to approve Davis' proposal next week. It offers producers two choices: 7.9 cents a kilowatt-hour if they agree to supply power for five years, or 6.9 cents a kilowatt-hour over 10 years. "The price of natural gas is higher than that," said Marty Quinn, executive vice president and chief operating officer of Ridgewood Power LLC, which owns three natural gas-fired co-generation plants. "If we operate, we'll lose money." Ridgewood is not operating, having been cut off by gas suppliers. The company sued PG&E last month seeking overdue payments and release from its contracts with the utility. A hearing is scheduled in El Centro today in another lawsuit filed by a small energy producer, an Imperial Valley geothermal producer that sued Edison for refusing to let it break its contract and sell on the open market. CalEnergy says Edison owes it about $140 million for energy sold since November. A company spokesman, Jay Lawrence, said CalEnergy was going ahead with its suit despite Davis' proposal. "We've had promises before," he said. In other developments: * A federal judge in Sacramento on Wednesday ordered Reliant Energy of Houston, a major producer, to continue selling power to California during emergencies, despite the company's argument that it may not be fully reimbursed. The order will remain in effect for 60 days or until the U.S. Federal Energy Regulatory Commission decides a related case. * Connell said the state budget surplus has shrunk to $3.2 billion because the state has spent roughly $2.8 billion on electricity. She criticized the administration for withholding basic information about state finances, and said she will begin an audit on Monday of the Department of Water Resources, which is responsible for purchasing power. Davis' aides said Connell took her action because the Democratic governor endorsed one of Connell's foes this week in the race for Los Angeles mayor, former Assembly Speaker Antonio Villaraigosa. A Connell aide scoffed at the notion. * Sen. Dianne Feinstein (D-Calif.) said she "never has had a response" from President Bush after writing him last month for an appointment to discuss the California energy crisis. In a wide-ranging lunch talk with reporters in Washington, she deplored the fact that "huge, huge profits are being made" in the California crisis, and said "an appropriate federal role" would be to guarantee a reliable source of power until the state can get nine new generators online. * Times staff writers Mitchell Landsberg in Los Angeles and Robert L. Jackson in Washington contributed to this report. (BEGIN TEXT OF INFOBOX / INFOGRAPHIC) Power Points Daily Developments * Wholesale electricity suppliers overcharged by about $5.5 billion between May and last month, and that money should be refunded to taxpayers and utilities, according to a Cal-ISO report. * The state may have to buy most of its power for summer on the costly spot market, which could drive consumers' bills up, a Davis administration report concludes. * State Controller Kathleen Connell said she will block a request by the Davis administration for $5.6 billion for state purchases of electricity. Verbatim "We owe the people the truth about how difficult this summer is going to be. We don't have a power fairy." Debra Bowen (D-Marina del Rey), Senate Energy Committee chairwoman CPUC Must Address Rates In QF Repayment Order - SoCal Ed 03/21/2001 Dow Jones Energy Service (Copyright (c) 2001, Dow Jones & Company, Inc.) LOS ANGELES -(Dow Jones)- Any order from the California Public Utilities Commission requiring utilities to pay small, independent generators going forward must determine how that could be done within the existing rate structure, a spokesman for Edison International (EIX) utility Southern California Edison said Wednesday. The utility was responding to a PUC proposed decision that would require utilities to pay small generators, called qualifying facilities, $79 a megawatt hour within 15 days of electricity delivery. The decision will be voted March 27 by the CPUC. "We're still reviewing (the decision) and should have more to say in a day or two. To the extent that the commission orders us to pay going forward of course we will. But it needs to address how we will pay the QFs," a SoCal Edison spokesman said. SoCal Edison and PG&E Corp. (PCG) unit Pacific Gas & Electric Co. are struggling under nearly $13 billion in uncollected power costs due to an inability to pass high wholesale power costs to customers under a rate freeze. Gov. Gray Davis Tuesday blasted the utilities for not having paid their QF bills in full since December. Pacific Gas & Electric Co. has made some partial payments to QFs, but SoCal Edison has paid nothing. Together, they owe the QFs about $1 billion, but the order doesn't address that debt. An Edison executive said, in reaction to the governor's sharp comments, that the company simply doesn't have the money to pay creditors. "The root problem here is there just isn't enough money in the current rate base to pay our bills," said Edison Senior Vice President of Public Affairs Bob Foster. "We understand the financial distress (the QFs) face; we are facing financial distress ourselves." The proposed PUC order would also require the state's investor-owned utilities to offer the small generators five- and 10-year contracts for power for $79/MWh and $69/MWh, respectively. The QFs "may be able to live with" the PUC proposal, but the five- and 10-year contract prices may be inadequate if natural gas prices at one of the California borders are high, said Jan Smutny-Jones, president of the Independent Energy Producers Association. Natural gas prices into California are currently higher than anywhere in the country. But some say the proposed decision may not be enough to prevent the QFs from filing involuntary bankruptcy proceedings against the utilities for the money they are still owed. "There's still a lot of skepticism. To say our position has changed based on the CPUC decision or the governor's announcement is not accurate. A lot still has to happen," said Jay Lawrence, a spokesman for a renewable creditors committee. -By Jessica Berthold, Dow Jones Newswires; 323-658-3872; jessica.berthold@dowjones.com -0- 22/03/01 01-27G State Says It's Accelerating Plan to Buy Power Utilities' Grid Government: Talks with Edison are reported near completion, but agreement with heavily indebted PG&E has a way to go. RONE TEMPEST; DAN MORAIN TIMES STAFF WRITERS 03/21/2001 Los Angeles Times Home Edition A-22 Copyright 2001 / The Times Mirror Company SACRAMENTO -- As blackouts hit California for a second day Tuesday, a key consultant to Gov. Gray Davis said negotiations to buy the power grid owned by the state's largest utilities "are proceeding at an accelerated pace." Wall Street consultant Joseph Fichera said talks with Southern California Edison could be wrapped up within days, although those with PG&E are much less advanced. The administration and PG&E have not reached even an agreement in principle, he said. PG&E, which has more debt than Edison, says its transmission lines are more extensive than those of its Southern California counterpart. The state wants to buy the utilities' transmission lines and other assets for about $7 billion to provide cash to the utilities, help stabilize the electricity supply and ease the power crunch that has plagued California for months. To research the grid purchase, Fichera said, the state has had to pore over 80,000 documents just to assess the utilities' liabilities. "We are working at a good pace," said Fichera, chief executive of the New York firm Saber Partners. " . . . If we get to a deal-breaker, it might be longer." By making Fichera, who is also a consultant to the Texas Public Utilities Commission, available to reporters Tuesday, the Davis administration was clearly trying to reassure the public that progress is being made on the governor's plan to pull the state out of the crisis. Since mid-January, when the big utilities' credit failed and suppliers stopped selling to them, the state has spent nearly $3 billion buying electricity from a handful of large suppliers in Texas, Oklahoma, Georgia and North Carolina. Not a cent has gone to the hundreds of alternative energy suppliers in California who provide about a quarter of the state's electricity. The Monday and Tuesday blackouts occurred partly because many of the cash-strapped alternative suppliers, including solar, biomass and wind power units, cut their normal supply to the system in half. They say Edison and PG&E have not paid them since November; the utilities say they are out of cash. Assemblyman Fred Keeley (D-Boulder Creek) said the plight of the alternative suppliers has dragged on because of the complexity of dealing with "almost 700 individual contractors." Another delaying factor, said Keeley, who with state Sen. Jim Battin (R-La Quinta) worked for almost three months to come up with a legislative plan to lower the small producers' prices, was "the huge enmity . . . manifested between the utilities and the qualifying facilities. These people just don't like each other." This week's blackouts provided two painful lessons for the Davis administration: * When it comes to electricity, size doesn't matter--every kilowatt counts. During peak use, a small wind power facility in Riverside County can make the difference between full power and blackouts. * There is no such thing as a partial solution. Unless the whole energy equation is balanced, the parts don't work. For the Davis plan to work, several key elements need to come together or utility customers will almost certainly face rate increases above the 19% already set in motion * The cost of power purchased by the state must be reduced through long-term contracts with the big out-of-state producers. These contracts, the details of which the Davis administration has kept confidential, are still being negotiated by Davis consultant Vikram Budhraja of the Pasadena firm Electric Power Group. The administration says it has concluded 40 contracts with generators, about half of which have been signed. According to the most recent statistics released by the Department of Water Resources, which buys power for the state, current prices are still well above the rate state Treasurer Phil Angelides says is necessary for a planned $10-billion bond offering to succeed. The bonds, set for sale in May, will be used to reimburse the state for the money it will have spent by that time to buy electricity. The state is currently spending at a rate of $58 million a day to buy power. If prices stay high, the $10 billion in bonds will not cover the state's power purchases by the end of the summer. Angelides says he cannot proceed with bridge financing for the bonds until the Public Utilities Commission devises a formula to guarantee that a portion of utility bills will be dedicated to bond repayment. Angelides has estimated that, under the January law that put the state in the power buying business, the state must be reimbursed $2.5 billion annually, and that $1.3 billion is needed to service the debt. PUC Administrative Law Judge Joseph R. DeUlloa is expected to announce his ruling on the reimbursement rate later this week, leading to a PUC vote on the matter as early as next week. * The rates charged for electricity by the alternative producers, known as qualifying facilities, must be cut at least in half, down from an average of more than 17 cents per kilowatt-hour. In his news conference Tuesday, Davis said he will ask the PUC to set QF rates at 6.9 cents for 10-year contracts and 7.5 cents for five-year contracts. Meanwhile, PUC Chairman Loretta Lynch, a Davis appointee, said Tuesday that the commission will vote next week on a proposed order requiring Southern California Edison and Pacific Gas & Electric to pay the QFs for electricity in the future. Lynch said a recent PUC assessment showed that the utilities have enough cash on hand for that. "We are trying to make sure the folks providing the power get paid," Lynch said. "The qualified facilities have demonstrated that they haven't been paid and that it is impairing their ability to provide power." The utilities contend that if they pay the small providers what they owe them, there will not be enough money left to pay other creditors. "There is not enough money in the current rate structure to pay the [alternative producers], pay the [Department of Water Resources] and pay the utilities for their generation," said John Nelson, a spokesman for PG&E. * The utilities must sell to the state the power they produce themselves, mainly from hydro and nuclear sources, at a rate only slightly above the cost of producing it. This is tied to the ongoing negotiations between the Davis administration and the utilities to restore the near-bankrupt utilities to solvency. * Times staff writers Julie Tamaki, Miguel Bustillo and Tim Reiterman contributed to this report. Davis OKs Subsidy of Pollution Fees Smog: As part of secret deal to get long-term energy contracts, state would pay for some of the credits that allow excess power plant emissions. Critics renew call for full disclosure. DAN MORAIN TIMES STAFF WRITER 03/21/2001 Los Angeles Times Home Edition A-23 Copyright 2001 / The Times Mirror Company SACRAMENTO -- As part of his closed-door negotiations to buy electricity, Gov. Gray Davis has agreed to relieve some generators from having to pay potentially millions of dollars in fees for emitting pollutants into the air, Davis said Tuesday. Davis announced two weeks ago that his negotiators had reached deals with 20 generators to supply $43 billion worth of power during the next 10 years. However, the Democratic governor has refused to release any of the contracts or detail various terms, contending that release of such information would hamper the state's ability to negotiate deals with other generators and therefore ultimately would raise prices Californians pay for electricity. Sources familiar with the negotiations, speaking on condition of anonymity, said the agreement reached with Dynegy Inc., a power company based in Houston, is one that includes language requiring that the state pay the cost of credits that allow emissions. Dynegy spokesman Steve Stengel declined to discuss the company's deal with the state. "We couldn't get them to sign contracts; it was a sticking point," Davis said of the decision to pay the fees of some generators. "We had to lock down some power so we were not totally dependent on the spot market." The fees in question are part of an emission trading system known as RECLAIM. Under the system, companies are allotted a certain amount of allowable pollution. If their operations pollute more, companies are required to purchase credits on an open market. Currently the credits cost about $45 per pound of pollution--an amount that can lead to a bill of well over $10 million a year for a power plant. The South Coast Air Quality Management District, which regulates pollution in the Los Angeles Basin, is considering steps to significantly lower the cost of the system--a step that could considerably cut the state's potential cost, Davis said. Senate Energy Committee Chairwoman Debra Bowen (D-Marina del Rey) defended the decision to cover the power company's costs. "It is a question of whether it brings down the price of power," she said. "If it brings down the price of power, I don't have a problem with it." Nevertheless, word that the contracts could bind the state to pay pollution fees caused some critics of Davis' policy to renew calls for Davis to reconsider the secrecy surrounding the power negotiations. The payment provision underscores the fact that the contracts involve more than merely the prices the state will pay for its megawatts, the critics note. "The Legislature should have known about it," said Senate President Pro Tem John Burton (D-San Francisco). "It is going to cost taxpayers money. It makes you wonder. . . . This was a policy issue that was never discussed with the Legislature." V. John White, a lobbyist for the Sierra Club, who also represents alternative energy producers, called the contract proposal "a horrible precedent." "Until we know exactly what the state has agreed to and how much of a subsidy this represents, we can't determine how serious the breach of principle this is," White said. Another critic of the secrecy of the negotiations, Terry Francke, general counsel for the California First Amendment Coalition, said the provision in question "raises the possibility that there are other [concessions]" that have not yet come to light. In the summer, when demand for power is highest, some generators probably will exceed pollution limits set by regional air quality management districts. To avert blackouts, state officials might ask the companies to keep plants running. In such cases, some sources familiar with aspects of the contracts said, the contract language could be interpreted to suggest that the state would cover any fines--although Davis said Tuesday the state will not cover the cost of fines. A recent Dynegy filing with the Securities and Exchange Commission underscores the rising cost of pollution-related measures. The company, which is partners with NRG Energy in three California plants in El Segundo, Long Beach and Carlsbad in San Diego County, said its "aggregate expenditures for compliance with laws related to the regulation of discharge of materials into the environment" rose to $14.3 million in 2000, from $3.6 million in 1999. A South Coast Air Quality Management spokesman said Dynegy's facilities appear to be fairly clean--although Sierra Club lobbyist White said Dynegy has been seeking a permit at one of its plants to burn fuel oil, which is dirtier than natural gas. Davis said he intends to "make this information public," but he added that "we do not want to put the public's interest in jeopardy by asking them to pay higher prices." "Nobody likes the notion that [the administration is] not being fully forthcoming," Davis said. "But I also have a corollary responsibility that I don't stick these generators with a higher rate." FERC ORDERS WILLIAMS ENERGY AND AES TO EXPLAIN THEIR REFUSAL TO MAKE CERTAIN RMR UNITS AVAILABLE TO CALIFORNIA ISO LAST YEAR 03/21/2001 Foster Electric Report 5 (c) Copyright 2001, Foster Associates, Inc. Following a preliminary, non-public investigation, FERC directed AES Southland Inc. and Williams Energy Marketing & Trading Co. (IN01-3) on March 14 to show cause why they did not violate section 205 of the Federal Power Act (FPA) by failing to provide power to the California ISO from two reliability must-run (RMR) generator units during a period in April and May 2000. The investigation responded to a matter referred by the Cal-ISO. If a violation is found, Williams Energy and AES could be required to refund excess profits of $10.9 million (as calculated by FERC) and face restrictions on their market-based rate authority for a year. The show cause order involves two generation units (Alamitos 4 and Huntington Beach 2), owned and operated by AES. Williams Energy markets all output from the Alamitos and Huntington Beach plants, including the two units at issue here, pursuant to a tolling agreement filed with the Commission. The Cal-ISO designated the two units as RMR units that it could call on when necessary to provide energy and ancillary service essential to the reliability of the California transmission network. The Cal-ISO makes both a fixed payment to the RMR owner or operator to compensate for the RMR unit's availability and a variable payment for the RMR unit's output (if the unit is not otherwise participating in the market). Williams Energy and the Cal-ISO executed RMR agreements, filed as rate schedules with the Commission, allowing the Cal-ISO to dispatch units "solely for purposes of meeting local reliability needs or managing intra-zonal congestion." The ISO may dispatch a non-RMR unit if the designated RMR unit is not available. Under its RMR agreement with the ISO, Williams is paid the greater of its contract price or marginal cost for operating RMR units. However, if a non-RMR unit has to be dispatched because a designated RMR unit is unavailable, Williams will be paid its bid price, not the RMR contract price. During the April to May 2000 period, the Cal-ISO sought to dispatch both Alamitos 4 and Huntington Beach 2 as RMR units to provide voltage support. However, according to the FERC order, Williams Energy refused to make Alamitos 4 available from April 25 through May 5, and to make Huntington Beach 2 available from May 6 through May 11, "for reasons not directly related to the necessary and timely maintenance of the units." Consequently, the Cal-ISO was forced to dispatch non-RMR units at a higher cost, namely, Williams Energy's bid price for service provided by the replacement units. By contrast, if the RMR units had not experienced outages and been available from April 25 through May 11, Williams Energy would have received either (1) the market revenues only from the respective units, which would have resulted in no payments for RMR output from the ISO to Williams Energy, or (2) Williams Energy's variable cost for operating the RMR units less the market revenues from the respective units' output. Accordingly, FERC observed, Williams Energy had "a financial incentive to prolong any outages of Alamitos 4 and Huntington Beach 2 in April and May 2000." The bid price for the non-RMR units was at or near the Cal-ISO's then-effective bid cap of $750/MWh, FERC continued. Therefore, Williams Energy received payments from the Cal-ISO of more than $11.3 million, or about $10.3 million greater than the estimated average variable operating cost of the non-RMR units (approximately $63/MWh) during the period in question. This indicates a refund amount, including interest, of nearly $10.9 million. The information in this order and a non-public appendix, the Commission declared, suggests that AES declared outages at the two RMR units and maintained Huntington Beach 2 in a manner inconsistent with good utility practice, and that Williams Energy took action to extend the outage at Alamitos 4 and to make Huntington Beach 2 unavailable for "pretextual reasons." Based on this information coupled with Williams Energy's financial incentive not to make the Alamitos 4 and Huntington Beach 2 units available, FERC found serious questions about whether (1) AES and Williams Energy violated applicable RMR contracts and tariffs on file with the Commission pursuant to FPA section 205 when they refused to make Alamitos 4 and Huntington Beach 2 available for dispatch by the Cal-ISO; (2) whether Williams acted inconsistently with its market-based rate authority and the market monitoring information protocols of the Cal-ISO's tariff regarding the unavailability of the RMR units during the period at issue; and (3) whether AES violated a tolling agreement on file with the Commission pursuant to section 205. The Commission identified two remedies for these potential violations: a refund by Williams Energy and/or AES of revenues received greater than the amount that would have collected from the ISO if the RMR units had been available, and a condition on Williams Energy's market-based rate authority. Specifically, for a one-year period, if an RMR unit were not available when dispatched by the Cal-ISO, a non-RMR unit dispatched in its place would only receive payment according to the terms of the applicable RMR contract. In other words, Williams Energy would not receive the bid price for operation of the substitute, non- RMR unit. The Commission directed Williams Energy and AES to show cause, within 20 days, why they should not be found to have committed the above-described violations and why the specified remedies should not be imposed. Further, to ensure procurement of all relevant information, the Commission instituted a formal, non-public investigation into the operation, maintenance and sales of power from the Alamitos and Huntington Beach plants in 2000 and 2001. Calif Consumers Failing To Conserve Pwr Despite Blackouts 03/20/2001 Dow Jones Energy Service (Copyright (c) 2001, Dow Jones & Company, Inc.) LOS ANGELES -(Dow Jones)- California consumers haven't been conserving enough electricity to relieve strain on the power grid and reduce demand in the state, a spokesman with the Independent System Operator said Tuesday. The ISO said that despite two straight days of statewide rolling blackouts, consumers aren't using less electricity, which means additional megawatts will be taken off the grid. As a result, blackouts could last longer and impact additional communities, the ISO said. ISO spokesman Pat Dorinson said Monday "conservation in California is no longer an option," but consumers in the state aren't heeding the call to reduce consumption. Conservation efforts during rolling blackouts Monday and Tuesday were far less than Jan. 17 and Jan. 18, when blackouts swept through Northern California due to transmission constraints. Jim Detmers, the ISO's vice president of operation, said consumers saved the state about 1,000 megawatts of electricity, enough power for 1 million houses. The ISO said conservation efforts Monday were about 500 MW or less. "We would be very happy if we saw the same amount this time," Detmers said. The state's Energy Commission said consumers think it's no longer important to save electricity until blackouts are imposed. "People have been saving generally, but it isn't a big bump from hour to hour," a spokesman for the Energy Commission said. Gov. Gray Davis launched a massive conservation campaign this month, promising consumers a rebate on their summer electricity bill if they save at least 20% of electricity, compared with last summer. The governor said he believes conservation this summer will amount to possibly saving 5,000 MW and averting the chance of rolling blackouts. -By Jason Leopold; Dow Jones Newswires; 323-658-3874; jason.leopold@dowjones.com Gas Co.'s Success Opens Debate Southern California energy supplier has reaped millions of dollars in state incentives for keeping down its costs. Though consumers get a share of the windfall, regulators are asking whether they should get more of the bonus, which is expected to be huge this year, as a form of price relief. The natural gas provider says it deserves to keep its reward. TIM REITERMAN TIMES STAFF WRITER 03/18/2001 Los Angeles Times Home Edition C-1 Copyright 2001 / The Times Mirror Company SAN FRANCISCO -- While consumers suffer soaring energy bills and the big electric utilities lurch toward insolvency, the news is not all dire at Southern California Gas Co. Through vigorous deal making, the Sempra Energy subsidiary has consistently beaten the volatile natural gas market during the last year, and the company stands to reap millions of dollars in savings through a state incentive program that rewards utilities for keeping costs down. For several years, the utility has been splitting the savings 50-50 with ratepayers whenever the company's gas costs fall slightly below market levels. Those savings, Gas Co. executives acknowledged, have shot to unprecedented heights during the state's power crisis. Now, in this climate of high consumer gas bills and runaway market prices, regulators are taking another look at the program. The question before the Public Utilities Commission: Should Gas Co. ratepayers, who endured huge bill increases this winter, get a bigger share of the savings? The total windfall under the incentive program has in some years exceeded $20 million. But the amount for the last 12 months is expected to multiply many times over, company executives said, partly because the Gas Co. has done so well in the wild market by selling, lending and trading gas as well as buying it. "The recent market conditions . . . could possibly result in some unintended consequences that result in shared savings of benefits that may be more appropriately allocated entirely to ratepayers," the PUC's consumer protection arm, the Office of Ratepayer Advocates, reported Oct. 30, even before the latest upward market spirals. Gas Co. representatives express frustration, saying they have done what the state has requested under its gas-cost incentive program: Buy smarter, and pass the savings along to its 5 million residential and small-business customers. The company contends it has worked hard to keep bills down and should be rewarded for taking risks to obtain gas at the lowest possible cost. "The PUC, every time we do well, raises the bar on us," said Jim Harrigan, director of gas acquisition. "I don't necessarily agree with it." By virtue of its purchasing power and storage and pipeline capacity, the Gas Co. has become a big player in the regional natural gas market. In the company's bustling trading room at its Los Angeles headquarters, 15 employees track price movements, pipeline supplies and even the weather via computer, while cutting deals and arranging gas shipments. Although the Gas Co. buys the commodity for its customers, the company also sells to marketers, other utilities and producers. State officials say the number of transactions by the company has risen steeply to 10,000 to 20,000 a year, including gas sales along California's border, where prices have rocketed. The PUC created the cost incentive program for the state's three major gas utilities--San Diego Gas & Electric Co. in 1993, Southern California Gas the next year and PG&E Corp.'s Pacific Gas & Electric Co. in 1997. Like Southern California Gas, SDG&E is a subsidiary of Sempra Energy. The program was designed to give utilities added motivation for obtaining gas at the best price for customers. It replaced lengthy and contentious reviews by the PUC, which assessed whether utilities had purchased gas at reasonable prices and sometimes ordered them to return millions of dollars to customers. An annual audit of the Gas Co. program and a staff evaluation requested by the PUC recently concluded that the program has achieved many of its goals, but it also proposed adjustments that would give customers a greater share of the rewards. "These incentives were designed in less volatile times," said program supervisor Mark Pocta of the Office of Ratepayer Advocates, which conducted the audit. "There is a question of how much should go to ratepayers and shareholders." His office also plans to assess whether the Gas Co.'s trading had any negative effects on the gas market, resulting in diminished supplies or higher prices for other utilities and their customers. Under the program, the Gas Co. shares risks and rewards with its ratepayers, but since the program was launched, it has consistently produced awards. If the cost of gas is 0.5% or more below a benchmark based on monthly gas market indexes, the company and its customers split the savings 50-50. California's gas utilities are not allowed to profit on their raw commodity costs; they merely pass along those costs to ratepayers with no markup. The savings under the incentive program are automatically reflected in consumers' monthly gas bills but are not itemized. At the end of the year, the utilities request their share of the savings, and the PUC has routinely granted approval. Then the companies, and thus their shareholders, are paid through customer utility bills. The resulting bill increases typically have been modest, less than 1%. But as the awards increase, regulators say, the effect on customers will become more significant unless the present structure is changed. "There's no question, when you start to talk about $100 million [or more in savings], and add [the company's award] into rates in a year, it will make a noticeable difference," said Los Angeles economist Jeff Leitzinger, president of Econ One, who has done consulting for the Gas Co. Still, he said, ratepayers should bear in mind that they already benefit from below-market gas and transportation costs. In the early years of the program, records show, the Gas Co.'s awards went from zero to $3.2 million, $10.6 million, $2 million and $7.7 million. Last year's award of $9.8 million is awaiting PUC approval. This year's proposed award, covering the period through the end of this month, has not yet been submitted by the Gas Co. But the utility has provided monthly figures and oral updates on a confidential basis to PUC officials, who declined to provide figures. Harrigan of the Gas Co. said the savings are expected to multiply "many times over," largely because the company was well-equipped for the market fluctuations and tried to insulate its customers from high gas prices. "Any trading company, especially one with assets like we have, has benefited from volatility in the market," he said. Harrigan said, however, that he does not believe the company's level of activity has adversely affected the market and that its trading pales in volume to that of unregulated energy companies. Anne Smith, the Gas Co.'s vice president of customer service and marketing, said the utility will not release figures for this year's incentive program until they are filed with the PUC in June. "I don't want to interrupt that process," Smith said, noting that the PUC ultimately will determine the company's award. "I think they need to focus on what [the Gas Co.] has done for the ratepayers. It has been immense." Although the typical monthly gas bill has risen to $80 from $50 a year ago, Gas Co. customers tend to have lower rates than those of other California utilities. The company's gas procurement cost in February was 66 cents per therm, or 100 cubic feet. That's more than twice last year's cost but only about half what sister company SDG&E paid for its 740,000 customers in February. It's also much lower than the $1.09 per therm PG&E pays. "We were as upset about the overall [gas price] increase as anyone else," Harrigan said. "I would rather see the prices of a year ago, even though we managed to do a little better in the [recent] environment." When it comes to keeping down costs, regulators say, the Gas Co. has advantages over other utilities in the marketplace. For one, the company has so much pipeline capacity at major gas basins that it purchases a relatively small portion of its needs--about 10% to 15%--at the California border, where prices in December briefly rose to the equivalent of $6 per therm, or 20 times those a year earlier. This presents opportunities. "At the beginning of the month, they forecast a certain amount of gas they have to buy," said Pocta of the Office of Ratepayer Advocates. "If they go out and buy and do not need to use as much because the weather is more moderate than expected, they can either inject the gas into storage or they can make sales at the border." With gas price run-ups like those seen in the last year, Pocta said, "there is a question: Should that benefit be shared, or flow entirely to ratepayers?" Customers, he pointed out, may be entitled to additional benefits because they pay for the interstate and intrastate pipeline capacity and the gas storage that give the company the flexibility to make advantageous deals. "By the same token, we want [the Gas Co.] . . . to go into the market and generate cost savings that can be passed on to the customers," he added. "We want them to have incentives. The question is how to balance them." Under deregulation, the Gas Co. adopted the nontraditional role of marketer, according to a PUC Energy Division report in January. The company makes gas sales at various locations. It engages in exchanges. It makes futures transactions to help stabilize costs. "They look for ways to lower the gas cost," said Richard Myers, program supervisor at the Energy Division. "Before they were lots more risk-averse. Now they feel they can take risks and make money for shareholders, and it is a benefit for ratepayers at the same time." The incentive programs are tailored to individual utilities, so it is difficult to compare them. Records show that the shared savings at SDG&E, a much smaller utility, declined steadily from $9.2 million in the 1996-97 cycle to $560,000 in 1999-2000. Spokesman Ed Van Herik said the falloff largely represents a drop in gas purchases, especially as the company sold off its own gas-fired electricity-generating plants. He said the company does not yet know how much savings have accrued in the last year. In an annual report to the PUC in February, PG&E said it had no savings under the incentive program and thus it is not entitled to any award for the 1999-2000 cycle. The Utility Reform Network, a San Francisco-based consumer advocacy group, said it will closely watch the PUC's evaluation of the incentive program at the Gas Co. "We want to make sure, given the dramatic changes in the gas market and prices, ratepayers are not left out of the [additional] benefits," TURN attorney Marcel Hawiger said. "We'll look to see whether the mechanism should be changed." Severin Borenstein, director of the Energy Institute at UC Berkeley, said the program should be changed to provide more incentive for utilities to enter long-term contracts that would smooth out volatility in the market. "Unfortunately, under the system," he said, "the only incentive is to beat the [spot] market." Use this file to download and print all the articles in this section (See attached file: Dow Jones Interactive-california-03233001-selected.doc) IMPLICATIONS FOR OTHER MARKETS (For easier printing of all the articles in this section use the file at the end of the section) New York: New York at the crossroads Wednesday, March 21, 2001 Energy Insight (Embedded image moved to file: pic24389.pcx) By Dave Todd dtodd@ftenergy.com U.S. Energy Secretary Spencer Abraham declared this week that the Big Apple is on the verge of being bitten hard by power cuts and rising energy prices. Delivering the keynote address at the U.S. Chamber of Commerce's national energy summit in Washington Monday, Abraham said, "California is not the only state facing a mismatch between supply and demand," what with "electricity shortages predicted for New York City and Long Island this summer" and low capacity margins threatening electricity reliability elsewhere across the country. But how likely is it that New Yorkers will face blackouts of the sort confronting Californians? Not very, says energy trade specialist Edward Krapels, managing director of Boston-based METIS Trading Advisors. Krapels, a consultant helping major Northeastern utilities, such as Consolidated Edison, design market-hedging programs, adamantly decried what he said are facile comparisons between conditions in New York and California, there being "more differences than there are similarities" between those two industrial cornerstones of the country's economy in respect to energy security management. "First of all, New York has a more varied portfolio of energy generation sources than California," he said. California has hydro, nuclear and gas, but when it lost a lot of hydro, the state needed gas to pick up the slack, and the "capacity just wasn't there." In New York's case, the state has oil and coal still in the mix and its overall dependence on gas is much lower than California's, Krapels added. New York avoids making same mistakes Portfolio diversity is one pillar of any effective plan to help New York avoid the same errors made in redesigning California's marketplace. New York's Independent System Operator (ISO), in a new report warning that the state is at an "energy crossroads" in terms of its capacity adequacy in the immediate future, argues that a concerted effort is required to arrest declining in-state generation capacity reserve margins, and a strategy must be put in place, whether or not new generation comes on-line, in accordance with current anticipated scenarios. A measure of New York's essential difficulty is that, between 1995 and 2000, statewide demand for electricity grew 2,700 MW, while generating capacity expanded by only 1,060 MW. With no major new generating plants in downstate New York fully approved, the gap is expected to continue to widen. To avoid "a replication of California's market meltdown" the New York ISO calculates the state's daily generating capacity needs to grow by 8,600 MW by 2005, with more than half of that located in New York City and on Long Island. Expressing concern this may be too big a burden for the current bureaucratic process to bear, the ISO wants to see a state-appointed ombudsman named to help would-be merchant power plant investors plow through red tape. "Increasing New York's generating capacity will also lessen the state's escalating and risky reliance on out-of-state sources of electricity," the ISO added. "Since 1999, New York State has been unable to cover its reserve requirements from in-state sources." Not everyone agrees with that analysis, insofar as it argues for circling the wagons inward. Some analysts believe the ultimate solution lies not in tying in more inwardly dedicated power, but in expanding the marketplace by breaking down inter-jurisdictional barriers. In any case, New York energy regulatory authorities and those responsible elsewhere in the U.S. Northeast, such as PJM (Pennsylvania-New Jersey-Maryland) Interconnection and the New England Power Pool, are in vastly better shape in terms of "cross-border" cooperation than California and its neighbors in that efforts are being made among various authorities toward developing an integrated regional electricity market. In California, by contrast, the state's focus?for example, in the case of new gas-fired power plant development?has been to ensure dedicated supply to the California market alone, rather than on a regional marketplace. (Embedded image moved to file: pic05075.pcx) The New York ISO's new broad-based analysis of market-restructuring needs argues that the relatively stronger health of its reformed environment is "due in large part to the ability of New York's utilities to enter into long-term power contracts." What needs to be done most, it says, is to move aggressively to build some of the more than 29,000 MW of "proposed new generation in the siting pipeline." In the meantime, the 30,200 MW of electricity New Yorkers used on a peak day last summer shouldn't be eclipsed on too many days this coming summer (given early long-range weather forecasts). Demand, however, is expected to increase at an annual average rate of up to 1.4%. So while New York City, the rest of the state and adjacent parts might breathe easy this year, it could be a brief rest from the fray. Meanwhile, a 4% shortfall is still being planned for this summer that is not yet provided for, as authorities hurriedly seek to arrange new generation plants around Manhattan, on Long Island and even on barges offshore. One way or another, whether it is the weather or the politics of siting new energy facilities, it's going to be a hot time in the city. Long-term solutions hit brick wall Meanwhile, attempts at longer-term solutions continue to run into trouble. Last week, Connecticut state regulators came out against a proposal to run a new underwater cable under Long Island Sound that Hydro-Quebec subsidiary TransEnergie U.S. Ltd. wants to build to pump more juice into Long Island Power Authority's load pocket. Despite strong promises from TransEnergie to be diligent in avoiding damage to oyster beds in Long Island Sound, the proposal failed to convince authorities, who were persuaded the pipeline project could lead to diversion of electricity from Connecticut. In similar fashion, private companies wanting to build 10 small independent power plants and temporary generators offshore New York City are running into intense opposition from environmental groups and citizen orga nizations?some of whom have taken their cases to the state assembly in Albany. The David vs. Goliath nature of such controversies has further alerted energy companies to the difficulties of addressing complex energy supply issues that may ultimately devolve to people not wanting things in their backyard, regardless of what the alternative might mean to their fellow citizens or the greater public good. But suddenly, in New York, California's troubles?while still distant in their intensity? may not be so far away. By some estimates, this summer's bills for Consolidated Edison customers could be up as much as one third or more over last year's charges. Letting the time slip when it comes to building new infrastructure isn't going to make the pain go away. NEW YORK: NY-ISO REPORT SAYS STATE NEEDS 4,000 - 5,000 MW OF NEW GENERATION SOON TO AVOID SEVERE SHORTAGES; NY-ISO ALSO ASKS FERC TO EXTEND BID CAP AND TEMPORARY EMERGENCY PROCEDURES 03/21/2001 Foster Electric Report 2 (c) Copyright 2001, Foster Associates, Inc. Raising the specter of an East Coast version of the California crisis, the New York Independent System Operator, Inc. (NY-ISO) is warning of serious electricity shortages, air quality deterioration and stunted economic growth without immediate approval of between 4,000-5,000 MW of new generating capacity in the state. Of this amount, 2,000-3,000 MW is needed to serve New York City. Another 8,600 MW of new capacity will have to be built by 2005, the NY-ISO said in a recent report, Power Alert: New York's Energy Crossroads. "New York is heading towards a very serious situation unless it acts immediately to get new supply sited within its borders," said NY-ISO president William Museler in a statement accompanying the report. "This report is essentially a caution light at New York's energy crossroads." Sources in the New York Public Service Commission have downplayed the NY-ISO's warning, asserting that a process for bringing on new generation is well underway, with more than 85 projects in the approval pipeline. In a related development, the NY-ISO asked FERC to approve a proposed tariff amendment (ER01-1517) extending existing bids caps in some of its markets until 10/31/02, and a separate and related amendment (ER01-1489) extending the NY-ISO's so-called temporary extraordinary procedures (TEP) that allow the ISO to make price adjustments and take other corrective actions if it finds evidence of market power abuse. The NY-ISO Report --The NY-ISO likened the situation in New York to that faced by California, where a relentless increase in demand has not been met with an equal increase in supply. The NY-ISO said that between 1995 and 2000, statewide demand for electricity rose by 2,700 MW, while generating capacity increased by only 1,060 MW. With no major new generating plants in downstate New York fully approved for construction at this time and generation demand in the state expected to grow around 1.3 percent annually for the next several years, the NY-ISO said this gap will continue to widen. The inevitable result of this trend is large rate increases for New York's power consumers. The NY-ISO's modeling suggests that "by 2005, statewide prices are likely to be more than 20-25 percent lower in the case in which new plants are built than in the case where they are not." In New York City, "the price to consumers of electric power could be reduced by as much as 28 percent when compared to the case of no new supply or load management programs." Besides large rate increases, the NY-ISO asserted that a failure to site and build new plants in New York will threaten power reliability in the state and lead to increasing reliance on out-of-state resources. The report said that if no new in-state generation comes on line in the next five years, the state's generation reserve margins will shrink from the current 14.9 percent above peak demand "to a dangerously low 8.4 percent by 2005." Pointing to California's situation, the report added that increased reliance on power imports "can subject electrical suppliers and customers in New York to transmission restrictions and political and economic considerations beyond the control or influence of responsible New York State entities." To avoid these harsh consequences, the NY-ISO said New York's new siting law, known as the Article X process, needs to be modified. Since the law was passed 18 months ago, the report noted that only two plants have been approved (both upstate) and neither has yet been built. The problem, according to the NY-ISO, is that the siting process "requires the cooperation of multiple state agencies." To expedite the process, the report suggested the "clear designation of a lead agency and the adoption of an `ombudsman program' to expedite and coordinate the work of the agencies responsible for the Article X process must be made." The NY-ISO added that an expedited approval process would improve the environment because older, more polluting power plants would be replaced by cleaner gas-fired units. On a more positive note, the NY-ISO reported that New York's restructured power market "is far healthier than that in California, due in large part to the ability of New York `s utilities to enter long-term power contracts. The basic structure of the New York market will also reduce unwarranted price spikes and other market disruptions through mitigation programs which automatically correct price spikes due to market power abuses." "Nevertheless, California `s experience raises a caution flag for all New Yorkers," the report continued. "The deregulated market in New York cannot achieve lower costs through competition without an increase in generating capacity similar in magnitude to the recommendations of this report, along with simultaneous efforts to institute greater conservation, better load management and alternative energy supply initiatives. Additionally, closer integration with regional suppliers of power is both inevitable and beneficial." The report also recommended (1) accelerating conservation, real-time metering and price-sensitive load programs; and (2) upgrading the state's and the Northeast's transmission infrastructure. The Proposed Tariff Amendments -- New York's Article X siting process and continuing tight supplies were also cited in the NY-ISO's request to extend from 4/30/01 until 10/31/02 its $1,000/MWh bid caps. FERC first approved the 1,000/MWh bid caps in July 2000 (see REPORT No.197, pg.6), and subsequently extended them. The NY-ISO's board "is sensitive to the Commission's concerns about undue intervention in energy markets," the filing related. "Nevertheless, the NY-ISO is submitting this request because it believes that delays in New York state's `Article X' process for licensing and siting new generating capacity is inhibiting supply from increasing to match continued demand growth. . . . Moreover, although the NY-ISO proposes to implement several demand-side measures this summer, it is not yet clear whether they will make demand sufficiently price-responsive to avoid periods of high prices that would not occur if there were an efficient demand-side response." Thus, the NY-ISO insisted that the requested extension is needed to provide more time for the development of additional generation and to gauge the effectiveness of the NY-ISO's proposed demand-side response mechanisms "in order to avoid exposing consumers to price spikes that are not a product of the interplay of competitive market forces." Other problems cited in the NY-ISO's filing which keep New York's power market from being fully competitive include continuing capacity and operating constraints at the state's Central-East interface, and questions over adequate gas supply. "The NY-ISO remains acutely aware that taking steps to deal with price abnormalities can have undesirable consequences," the filing continued. "Nevertheless, the NY-ISO believes that the $1,000/MWh cap that has been used in the PJM's markets since inception does not appear to have had an adverse impact there. . . . The permanent bid caps in PJM, and the interim bid caps in ISO New England (proposed for extension through the end of 2001) also make continuation of the NY-ISO's bid caps more important in order to maintain uniformity across the Northeastern markets. The NY-ISO also continues to believe that suppliers will not be materially harmed by the continuation of bid caps, which are likely to come into effect very rarely and are set at levels that prevent only artificially high run-ups in prices." The NY-ISO's request to extend its TEP procedures (which also were previously extended) through 10/31/02 cited similar problems with New York's power markets, but claimed that the NY-ISO "has made great strides" toward eliminating market design and software flaws. "The TEPs were, and remain, an indispensable tool for responding to and correcting market flaws and other instances where the markets are not operating as the NY-ISO and the Commission intended," the filing insisted. MASSACHUSETTS: Attorney general says summer poses electricity concerns By JOHN McELHENNY Associated Press Writer 03/19/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. BOSTON (AP) - The state's top consumer advocate warned that Massachusetts may see "California-type" electricity blackouts this summer when temperatures rise and residents turn on air conditioners and fans. "It would be a mistake to feel this is a cold weather problem," said Attorney General Thomas Reilly in an interview with The Associated Press. "Our major problem will come this summer." State deregulation of the electric industry has been among the factors blamed for local power outages in California, and on Monday, California for the first time suffered rolling blackouts across the entire state. Massachusetts relaxed regulations on its own electric industry in 1998 to attract more companies to stir competition. But that hasn't happened yet, largely because the current high cost of oil and gas make it expensive to produce electricity. "The promise of deregulation was that there was going to be competition," said Reilly, a Democrat. "That competition in the wholesale market is not happening." Hot summer weather drives up electricity use as residents turn on air conditioners and fans, and Reilly said a few particularly hot days could strain the grid that provides the region's power. A spokeswoman for the region's power grid said electricity use is expected to rise 1.5 to 2 percent this year, but the region should have enough power because of six new power plants that have begun generating electricity in the past 18 months. "The situation is unlike California because we have new generation coming on line that is outpacing demand," said Ellen Foley, spokeswoman for ISO New England Inc., which manages the grid of 330 generators connected by 8,000 miles of high voltage transmission lines. Still, a particularly hot day and an unforeseen power generation breakdown could prompt ISO to ask residents to conserve electricity, a situation that arose once last summer, Foley said. In order to avoid any power outages and protect consumers, Reilly repeated calls for electric companies to build more power lines and to offer more options for new customers who have signed up since deregulation. Those customers typically pay more than long-term customers. Electric transmission companies should also be allowed to enter into two-year contracts with suppliers, instead of the six-month contracts many have now, to avoid short-term price spikes for consumers, Reilly said. The Attorney General's Office acts as an advocate for consumers. Michael Monahan, a spokesman for NSTAR, which provides electricity to more than 1 million customers, is upgrading some of its power lines and last year built a new line to Cape Cod, but currently has no lines under construction. "I wholeheartedly concur with the attorney general that it's something we have to focus on," Monahan said, but he added, "The indications I see are that we have an ample supply of electricity." California's statewide outages were ordered on Monday after a transformer fire, high demand and a lack of electricity imports pushed power reserves to near zero. California partially deregulated its electric industry in 1996, two years before Massachusetts. --- On the Net: Attorney General's Office: http://www.ago.state.ma.us NSTAR: http://www.nstaronline.com ISO New England Inc.: http://www.iso-ne.com NEVADA: Discussion of bill stopping power plant sales to continue Wednesday By JOHN WILKERSON Associated Press Writer 03/19/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. CARSON CITY, Nev. (AP) - Lawmakers hit more delays Monday in trying to pass a measure that pulls the plug on the sale of Nevada power plants to avoid California-style energy problems. "The goal of this bill is only stopping the divestiture of power plants and making sure it's constitutional," said Senate Commerce and Labor Chairman Randolph Townsend, R-Reno. "And that's not as easy as it sounds." Townsend's comment just before his committee began working on SB253 was prophetic - witnesses kept bringing up the need for more flexibility in the measure. Translation: Don't kill all deals by stopping Reno-based Sierra Pacific Power and Las Vegas-based Nevada Power from selling their Nevada power plants until June 2003 - and possibly until 2006. Pete Ernaut, a lobbyist for Reliant Energy which has been trying to buy a power plant, said unforeseen market changes could make a plant sale before 2003 a deal that would be in the public's interest. "If you put a two-year moratorium on these plants, all these deals are going to go away," he said. "When the cow leaves the barn, it's difficult to catch." Townsend had hoped to wrap up committee work on SB253 on Monday. Now it's up for review again Wednesday in the Commerce and Labor Committee. Reliant isn't the only company trying to keep power plant purchases alive. Earlier this month, executives of Pinnacle West Energy told the committee that it's in the public's interest to allow Sierra Pacific Resources to sell its Harry Allen power plant. The Harry Allen plant produces about 72 megawatts out of the 2,900 megawatts of energy that Nevada utilities generate. Pinnacle has plans to expand that to 700 megawatts by 2004. Other provisions not strictly related to the plant divestitures, such as ways in which Sierra Pacific and Nevada Power can recover the cost of undoing the sales contracts, don't have to be included in SB253, Townsend said. Townsend said the other concerns dealing with the energy crisis and utility deregulation can be handled in later bills - but the power plant sale issue must be handled now. Nevada's PUC and the Federal Energy Regulatory Commission had directed Sierra Pacific and Nevada Power to sell the plants as a condition of the companies' merger in 1999 under the parent company Sierra Pacific Resources. Critics of the plant sales say the plants generate about half the state's electricity - and if they're sold, the unregulated new owners could sell the power to other states and put Nevada into the energy dilemma California faces of shrinking supply and rising prices. The Southern Nevada Water Authority has presented an analysis stating that rate payers will save from $1.7 billion to $3.5 billion by July 2001 if the power plant sales are stopped. Nevada's Consumer Advocate's Office previously had projected a conservative estimate of $915 million in savings. MAINE: Panel of experts would review impact of energy deregulation By GLENN ADAMS Associated Press Writer 03/19/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. AUGUSTA, Maine (AP) - In the wake of rolling blackouts in California and rate spikes in their home state, Maine's top legislators proposed a study Monday into the effects of deregulation of the energy industry. "Deregulation of electricity is a new idea and we still have a lot to learn," Senate President Michael Michaud said as he called for the analysis. A panel of industry insiders, elected officials and consumers would study issues such as what standard rate consumers can expect and the likelihood of energy shortfalls over the next three years, and whether Maine consumers are vulnerable to anti-competitive activities. In addition, the Blue Ribbon Commission would look into whether changes in Maine's deregulation law are needed to encourage more generating capacity, improve conservation and spur competition. The study is being proposed as consumers remain mindful of a power crisis in California that resulted from high wholesale energy costs, a consumer rate cap and too few power plants in that deregulated state. Maine's deregulation law is designed to avoid such pitfalls, said Rep. William Savage, D-Buxton, House chairman of the Legislature's Utilities Committee. Maine's law does not cap consumer prices, as California's does, and the state has more than enough generating facilities to meet the state's energy needs, Savage said. Since Maine's deregulation law took effect in March 2000, Bangor Hydro-Electric Co. rates have increased 19 percent. The Public Utilities Commission approved a residential standard rate increase as recently as last month. Federal energy regulators are reviewing their decision to allow steep fee increases for utilities and power wholesalers that fail to arrange enough capacity to meet customers' peak load. Gov. Angus King and all four members of Maine's congressional delegation oppose the hike. The PUC has approved standard rate increases for energy delivered by Central Maine Power Co. to medium-sized and large industrial users. On the other hand, some towns and school districts are saving money on energy through deals they can get in the deregulated market. In the meantime, legislation has been introduced in response to some of the changes that have occurred in Maine's deregulated energy industry. One would use some of the money from the sale of power-generating assets to offset an increase in rates paid by large industrial users, said Sen. Norman Ferguson, R-Hanover, Senate chairman of the Utilities Committee. Supporters of the utility study that was proposed Monday said they are not looking to make changes in Maine's deregulation law, but if it needs fixing it could be done during next year's session. The lawmakers' primary interest is to find out how trends in a new environment designed to encourage competition will affect consumers, and to try to identify what consumers can expect in the few years ahead. House Speaker Michael Saxl, D-Portland, said the Legislature "has a fundamental public policy interest in making sure rate-payers and businesses are protected against exorbitant rate hikes." Michaud, D-East Millinocket, said he's interested in finding out how future changes in electric prices and availability might affect businesses and consumers in northern Maine. "The economy in my part of the state is the most vulnerable, and I want to make certain we are leaving no stone unturned in our effort to prevent any shocks to the economy in northern, western and eastern Maine," Michaud added. The commission would include House and Senate members from each party, a utility executive, and representatives of energy producers, providers, a large commercial consumer and individual consumers. OREGON: State Senate moves to combat energy crisis 03/16/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. SALEM, Ore. (AP) - In an attempt to avoid a California-like energy crisis, the Oregon Senate approved a bill Friday that would quicken the process of siting power plants that use gas and renewable resources. "It's important for Oregon. It makes sure that energy will be available to everyone," said Sen. Lee Beyer, D-Springfield. The measure, SB843, would shorten the siting process for power plants that use gas and renewable resources, like wind, from a year and a half to a matter of months. The speeded-up process would be in effect for two years. "If we can act now, we can actually start to solve power supply problems by this summer," said Sen. Jason Atkinson, R-Jacksonville California's strict regulations on the construction of new power plants has contributed to its current shortage and legislators took note. Beyer said though California was definitely a wake-up call, the measure is a reaction to the larger power picture in the Northwest. With low rainfall, hydroelectric generators will have trouble meeting demand, Beyer said. Gas-fired and wind plants could come online as soon as this fall and would provide relief. "We are not in a position to sit back and do nothing about the energy crisis the Northwest and the country are experiencing," said Senate Minority Leader Kate Brown, D-Portland. Conservationists, however, caution that lawmakers should be careful not to rush to provide power at the expense of environmental standards. WISCONSIN: Two utilities to add 975 megawatts in plan to avoid energy crisis By The Associated Press 03/22/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. Plans of two state utilities to add 975 megawatts to Wisconsin's electric power grid as a way of avoiding an energy crisis similar to California's were questioned Thursday by a consumer advocate who said too many power plants may be in the works. "Certainly nobody wants to see blackouts like you have in California but there is the danger Wisconsin could be overbuilding," said Steve Hiniker, executive director of the Citizens' Utility Board, which represents consumer interests in utility rate cases. He noted that plant construction costs ultimately are born by the utility customers. Alliant Energy Corp. announced its proposal Wednesday - in a filing with the state Public Service Commission - to spend $1 billion to build one coal and two gas-fired power plants. Alliant has proposed building a 500 megawatt coal-fired plant and a 100 megawatt natural-gas fired plant by 2006. It also wants to build a 200 megawatt natural gas-fired facility in 2011. Wisconsin has not built a coal-fired plant in more than two decades. Alliant has not determined the plants' locations. Also, Madison Gas & Electric, the state's smallest investor-owned utility, said Wednesday that it had signed deals to buy 175 megawatts of power from three generating plants in Wisconsin and Illinois. "Three out of the four past summers, we've had public appeals for conservation due to shortages somewhere in the state. We need to take steps to avoid that, and the California situation makes that even more clear," said Alliant spokesman Chris Schoenherr. "Getting more iron in the ground will give us more flexibility in the state to be able to react." Alliant acknowledged the new plants will probably mean rate increases, but it was too early to say how much rates would go up. California's problems, which this week resulted in the first deliberate blackouts since World War II, stemmed from underestimating the state's power needs, forcing utilities to sell their power plants but not allowing them to secure long-term supply contracts, and freezing rates, among other things. But Wisconsin's situation is far different. The state has moved slower than California toward deregulation, and there has been no desire here to speed up the process in recent years as power reliability became a problem. The PSC estimates that Wisconsin will need an additional 3,000 megawatts of power over the next decade. Hiniker said Wisconsin needs to coordinate its planning to avoid overbuilding. The costs of new power plants are passed on to ratepayers, meaning electric bills will increase as new generation is added. In addition, coal-generated power plants are a major source of air pollution in the state. "We don't have the advance planning that has kept Wisconsin from overbuilding in the past," said Hiniker. "This is something the PSC should be doing." MG&E's deals are: -A 10-year contract to buy 75 megawatts from Calpine Energy Services starting in May 2004. The power will come from the natural gas-fired plant Rock River Energy Center, near Beloit. Calpine Energy Services is a unit of San Jose, Calif.-based Calpine Energy Corp. The plant is being built by Northbrook, Ill.-based SkyGen Energy LLC, which Calpine bought last year from SkyGen President Michael Polsky and Wisvest Corp., a unit of Wisconsin Energy Corp. -A 10-year contract to buy 50 megawatts of power from the Rainy River Energy Corp. starting in May 2002. The power is coming from a natural gas-fired plant near Joliet, Ill. owned by LS Power Co. Rainy River is a unit of Duluth-based Minnesota Power Inc. -A five-year contract to buy 50 megawatts from an El Paso Merchant Energy plant near Cordova, Ill., in western Illinois. The owner of the natural gas facility is the Cordova Energy Center Co., which is a unit of Iowa-based MidAmerican Energy Holdings. Alliant also offered support in the Wednesday filing for a $7 billion plan of Milwaukee-based Wisconsin Energy, which includes five new power plants in Oak Creek and Pleasant Prairie. -- On the Net: CUB: http://www.wiscub.org/ Alliant Energy: http://www.alliant-energy.com Wisconsin Public Service Commission: http://www.psc.state.wi.us Wisconsin Energy: http://www.wisenergy.com/ Madison Gas & Electric: http://www.mge.com Use this file to download and print all the articles in this section (See attached file: Dow Jones Interactive-california-03233001-implications.doc) If you wish to be removed from the distribution list for this update please contact Pru Sheppard - DC. All recipients of this message have been Bcc'd as part of industry best practice for broadcast emails. +-------------------------------------------------------------+ | This message may contain confidential and/or privileged | | information. If you are not the addressee or authorized to | | receive this for the addressee, you must not use, copy, | | disclose or take any action based on this message or any | | information herein. If you have received this message in | | error, please advise the sender immediately by reply e-mail | | and delete this message. Thank you for your cooperation. | +-------------------------------------------------------------+ - Dow Jones Interactive-california-03233001-selected.doc - pic24389.pcx - pic05075.pcx - Dow Jones Interactive-california-03233001-implications.docMessage-ID: <17148582.1075847616031.JavaMail.evans@thyme> Date: Mon, 26 Mar 2001 02:23:00 -0800 (PST) From: steven.kean@enron.com To: mary.clark@enron.com, sarah.palmer@enron.com, courtney.votaw@enron.com, mark.palmer@enron.com, karen.denne@enron.com Subject: thank you Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Mary Clark, Sarah Palmer, Courtney Votaw, Mark Palmer, Karen Denne X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf fyi ----- Forwarded by Steven J Kean/NA/Enron on 03/26/2001 10:23 AM ----- Kim Frumkin@EES 03/26/2001 09:30 AM To: Steven J Kean/NA/Enron@Enron cc: Subject: thank you Steve, Thank you for participating, once again, in the video for deal central. The videos are created, housed and maintained in Beth Tilney's area. I mentioned to Beth that Corporate may have an interest in sharing/utilizing the EES video equipment and expertise. Robert Pearson (our in-house film expert) has a masters in video programming, taping, etc. And the good news....within the next few weeks, the editing equipment will be fully up and running. Once installed and operational, all in-house produced videos will have the look and feel of those created by outside vendors. Please feel free to contact Beth (ext. 3.5022) if you have an interest in exploring this concept. And thank you again for your participation. Best-Kim Message-ID: <22949556.1075847616080.JavaMail.evans@thyme> Date: Sun, 25 Mar 2001 10:49:00 -0800 (PST) From: steven.kean@enron.com To: roger.sumlin@enron.com Subject: Re: Presentation at ETS HR Employee Meeting Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Roger Sumlin X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf Thanks. I was glad to do it and would do it again... next time my computer will work. I benefitted a great deal from what I heard from the group, especially regarding the PRC. Roger Sumlin 03/23/2001 09:34 AM To: Steven J Kean/NA/Enron@Enron cc: Gary P Smith/OTS/Enron@ENRON, Wilson Barbee/HR/Corp/Enron@ENRON, Brian Schaffer/Corp/Enron@ENRON, Ann Vaughn/HR/Corp/Enron@ENRON, Fran Fagan/OTS/Enron@ENRON Subject: Presentation at ETS HR Employee Meeting Steve . . . FYI -- we conducted a post-event survey on opinions about the HR employee meeting held last month and the HR management team thought you should know that participants rated your presentation very high. When asked what should be kept the same next time, participants commented as follows about your presentation: "I think a presentation from Corporate HR is of great value." "Keep the presentations by the officers . . . to talk about the business." "I liked having other people from ETS/Enron there to better understand the big picture and where Enron is going." "Continue to bring in invited guests to keep the group apprised of Corporate activities. I liked the opportunity to hear both Stan and Steve--the field staff don't get as many opportunities to hear from corporate management." "Visits by Steve Kean and Stan Horton. Their perspectives are very good . . ." Clearly, your participation provided much value to the group and we appreciate very much your taking the time to come meet with us and share information. You should expect that we'll be asking you to come back again! Regards, - Roger Message-ID: <29991299.1075847616129.JavaMail.evans@thyme> Date: Sun, 25 Mar 2001 10:46:00 -0800 (PST) From: steven.kean@enron.com To: john.ambler@enron.com Subject: Re: Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: John Ambler X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf Thanks. Look forward to seeing you. Sorry I left Jimmy off the note, I know he must be doing a good job. John Ambler@ENRON_DEVELOPMENT 03/23/2001 10:11 AM To: Steven J Kean/NA/Enron@ENRON cc: Maureen McVicker/NA/Enron@Enron Subject: Re: Steve, Thanks for sending this note to Wade. I'm certain that the NYT story is infinitely better because of Wade's involvement. It was a team effort, but you should know that Jimmy Mogal also was very involved. Of course, Wade wants to avoid damaging the company and your note helps to keep him up for these risky/must do requests. Along these line, I'd like to be able to give you a brief update on activities and issues. I'll check with Maureen about scheduling 15-20 minutes. John From: Steven J Kean@ENRON on 03/20/2001 09:06 AM To: Wade Cline/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT cc: Johan Zaayman/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, John Ambler/ENRON_DEVELOPMENT@ENRON_DEVELOPMENt Subject: I just saw the NYT article. Nice job. It's nicely positioned as an issue about India's resolve to encourage foreign investment and live up to contracts. Message-ID: <9089488.1075847616157.JavaMail.evans@thyme> Date: Sun, 25 Mar 2001 10:40:00 -0800 (PST) From: steven.kean@enron.com To: mhain@iso-ne.com Subject: I'm Leaving Enron Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: mhain@ISO-NE.com X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf Congratulations on your new position! This all came up rather suddenly, at least as far as I can tell. If you have any interest, I would like to talk to you sometime. ----- Forwarded by Steven J Kean/NA/Enron on 03/25/2001 06:38 PM ----- Mary Hain@ECT 03/23/2001 12:24 PM To: David_Aamodt@pgn.com, dapnucc@teleport.com, dick@pnucc.org, seabron.adamson@frontier-economics.com, Frank_Afranji@pgn.com, raa@vnf.com, Joseph Alamo, ajaldrich@snopud.com, Jeff Alexander, Al Alexanderson@Enron, Keonee Almaida, hollis.alpert@ferc.fed.us, Brenda Anderson, angles@howry.com, Alan B Aronowitz/HOU/ECT@ECT, gdb@vnf.com, npbaker@bpa.gov, ellen@tca-us.com, paulb@citizenspower.com, paulb@citizenspower.com, garybarbour@email.msn.com, jbartus@cammckenna.com, glynda.becker@mail.house.gov, Samuel Behrends, bbennett@bpa.gov, sberman@hewm.com, ramsen.betfarhad@mail.house.gov, KBILAS@SKADDEN.COM, sbooye@Skadden.com, raymond.r.boyce@state.or.us, tbradley@bracepatt.com, scott.brattebo@pacificorp.com, sbrose@steptoe.com, sbuchheit@bracepatt.com, alanb@wutc.wa.gov, Jim Byrne, vergil.cabasco@mail.house.gov, johncameron@dwt.com, Doug Carmichael, Ed Cassidy, ajchambe@llgm.com, Melissa Chiechi, elchristensen@snopud.com, kevin.clark@ci.seattle.wa.us, rcloward@avistacorp.com, david_cohen@rniinc.com, Bill Comish, Victor Contract, powerlac@aol.com, Frederick Coolbroth, michaelcorrigan@bchydro.bc.ca, kcorum@nwppc.org, KCurry@bracepatt.com, Wanda Curry/HOU/EES@EES, gdahlke@paine-hamblen.com, kadaly/atty%moheck@mcimail.com, mday@gmssr.com, dearing@chelanpud.org, tdeboer@paine-hamblen.com, Tom_Delaney@enron.com, sdleonard@earthlink.net, dldorrell@stoel.com, Mary Doyle, Jay Dudley, mce2280@idahopower.com, michaelearly@earthlink.net, Katherine Edwards, rle@givenspursley.com, imaxtrans@aol.com, Chris Elliott, sandra.elliott@ferc.fed.us, kerwin@ect.enron.com, dezickson@mwe.com, Jim Fallon, fallonr@howrey.com, Elias Farrah, Michele_Farrell@pgn.com, dfaulk@puget.com, gfergus@brobeck.com, Willard Fields, sfisher@avistaenergy.com, pfox@bracepatt.com, Pat Franklin, John Frazzell, ericf@prestongates.com, don.furman@pacificorp.com, segfurst@bpa.gov, Jackie Gallagher, craiggannett@dwt.com, Alvaro Garcia/LON/ECT@ECT, sbishop@gibbs-bruns.com, wgibson@nwppc.org, ggilbert@ci.tacoma.wa.us, Pat Gilman, Alex Goldberg, jlgreene@energyadvocates.com, Chris_Groener@mail.house.gov, Mary Groggin, Mark E Haedicke/HOU/ECT@ECT, Stephen Hall, steve.c.hall@enron.com, Leo Hamblin, whannaford@NWPPC.org, jim.harding@ci.seattle.wa.us, rhardy@hardyenergy.com, kharri@puget.com, Steve_Hawke@pgn.com, dhawkins@caiso.com, marc.hellman@state.or.us, Scott Helyer, mhenry@bracepatt.com, dwmp@teleport.com, rhornby@tca-us.com, mhornst@aol.com, dhuard@jmbm.com, Marlene Huntsinger@pgn.com, cfi1@tca-us.com, Richard Ingersoll/HOU/ECT@ECT, pljacklin@stoel.com, montrey@aol.com, danj@cfmdc.com, kgjohnson@bpa.gov, ljohnson@pwrteam.com, Karen E Jones/HOU/ECT@ECT, mkanner@kannerandassoc.com, karid@perkinscoie.com, pkaufma@ect.enron.com, Paul Kaufman/PDX/ECT@ECT, Jeffrey Keeler/Corp/Enron@Enron @ Enron, Devon Kehoe , James Keller, Joe.Kelliher@mail.house.gov, kkennedy@bdbc.com, Rick Kessler, rdking@bpa.gov, Harry Kingerski/HOU/EES@EES, Harry Kingerski/NA/Enron@Enron, rsk@schwabe.com, gwilliams8@austin.rr.com, John Klauberg, Holli Krebs/HOU/ECT@ECT, ekrogh@wiredweb.com, blafferty@avistacorp.com, wdlamb@bpa.gov, John Lamb, Therese Lamb, srlarson@bpa.gov, Cindy_Tatham@co.washington.or.us, zora.lazic@bchydro.com, kaleathley@bpa.gov, pamela_lesh@pgn.com, Debi LeVine, lcg@europa.com, doug.little@powerex.com, Robert Loeffler, Chris Long, sjlong@bpa.gov, rlopezv@www.conet.com.mx, david_lucio@iep.illinova.com, king.lum@bchydro.bc.ca, kevin.lynch@pacificorp.com, Mark Maehr, Randal T Maffett/HOU/ECT@ECT, John Malowney/HOU/ECT@ECT, Sueyen Mao, Susan J Mara/SFO/EES@EES, Susan J Mara/NA/Enron@Enron, Lee Martin@Enron, maurw@perkinscoie.com, Wayne Mays/PDX/ECT@ECT, Michael McCall/HOU/ECT@ECT, Sandra McCubbin/NA/Enron@Enron, Travis McCullough/HOU/ECT@ECT, Michael McDonald, brugen@erols.com, mckinley@wpuda.org, mcm@vnf.com, mcnichol@wapa.com, shauna@pnucc.org, Maureen McVicker, pmeringolo@brobeck.com, demetcalf@bpa.gov, cemeyer@bpa.gov, jmilegich@sppc.com, fred_miller@pgn.com, Jeffrey Miller/HOU/ECT@ECT, jerry.miller@pacificorp.com, Laura Miller, scott.miller@ferc.fed.us, Bill Miner, phil_moeller@gorton.senate.gov, pmohler@hewm.com, emoler@velaw.com, nkmorgado@bpa.gov, Mike@tonkon.com, krmoxness@bpa.gov, mmps@millcreeklaw.com, pmurphy@mbllp.com, terrym@millcreeklaw.com, bmurtha@acy.sunint.com, Rich Nassief, tod@mgninc.com, Douglas_Nichols@pgn.com, Patty Nichols, Christi Nicolay, tmnoguchi@bpa.gov, darcy@tonkon.com, Sarah Novasel@sarah novosel/Corp/Enron@Enron, Sarah Novosel/Corp/Enron@ENRON, Tom O'Donnell, PObenchain@idahopower.com, Pegy Olds, Carol Opatrny, tpaine@avistacorp.com, Dave Parquet, bpascoe@mtpower.com, afpaschke@bpa.gov, ccperigo@bpa.gov, wlpernas@stoel.com, lpeters@pacifier.com, jill@pnucc.org, Mona L Petrochko/NA/Enron@Enron, npickover@bracepatt.com, Phillip Platter/HOU/ECT@ECT, Alfred Pollard/HOU/ECT@ECT, Walt Pollock@Enron, gporter@sppc.com, Kevin M Presto/HOU/ECT@ECT, jquint@puget.com, arlene.ragozin@ci.seattle.wa.us, maraschio@bpa.gov, Dale Rasmussen/HOU/ECT@ECT, Scott Rasmussen, Bobby Reeves/PDX/ECT@ECT, preiten@pngc.com, reyna2r@kochind.com, shellyr@pacifier.com, Jeff Richter/HOU/ECT@ECT, raroach@bpa.gov, atrodrigues@bpa.gov, rarogers@bpa.gov, peterroi@erols.com, Rothfelder@rlo-law.com, Richard Sanders, jsaven@pacifier.com, Michael Schilmoeller/PDX/ECT@ECT, jschlect@avistacorp.com, Sabine.Schnittger@frontier-economics.com, Diana Scholtes/HOU/ECT@ECT, Roger Seifert, Cara Semperger, asettanni@bracepatt.com, Richard Shapiro, Vicki Sharp/HOU/EES@EES, Mike D Smith/HOU/EES@EES, Joshua Sheinkman, jshurts@nwppc.org, Sid, msizer@ci.tacoma.wa.us, slavens.paula@deps.ppl.com, small@wrightlaw.com, small@wrightlaw.com, douglas.smith@ferc.fed.us, Mike Smith, Roger Smith, Larry Soderquist/HOU/ECT@ECT, Harvey Spigal, mstauffer@mtpower.com, James D Steffes/NA/Enron@Enron, James D Steffes/NA/Enron@Enron, mestewardpsedc@worldnet.att.net, JKStier@BPA.gov, rbstrong@paine-hamblen.com, DASwanstrom@Verner.com, Mike Swerzbin/HOU/ECT@ECT, tabors@tca-us.com, Ron Tapscott/HOU/ECT@ect @ ECT, James K Tarpey/DEN/ECT@ECT, Jake Thomas, ryan_thomas@burns.senate.gov, jrt2058@idahopower.com, maryann@pnucc.org, mtierney@sempra.com, robin_tompkins@pgn.com, Ann Tumlinson, AW Turner, Sheila Tweed, Lisa Urick, rvermeers@avistacorp.com, Frank W Vickers/HOU/ECT@ECT, John Walley, kristiwallis@sprintmail.com, walshl@howrey.com, swalton@enron.com, Steve Walton/HOU/ECT@ECT, kaward@bpa.gov, Kim Ward/HOU/ECT@ECT, Carol Wardell, dwatkiss@bracepatt.com, sawatson@bpa.gov, judy.welch@NWPP.ORG, 211-6155@MCIMAIL.COM, Kwenzel@zzz.com, cwestadt@sppc.com, Brian Whalen, Bill Williams/PDX/ECT@ECT, klwmtp@worldnet.att.net, lyn_williams@pgn.com, Greg Wolfe@ECT, Vickie Wolk-Laniewski@Enron, Ed Wood/HOU/ECT@ECT, mwood@stoel.com, Steve Wright, Teresa L Wright/HOU/ECT@ECT, WSCC, Charles Yeung, Christian Yoder/HOU/ECT@ECT, Steven J Kean/NA/Enron@Enron, Steve Kean, Travel in the Park, D Brett Hunsucker/HOU/ECT@ECT, Carla Hoffman/PDX/ECT@ECT, Bernadette Hawkins, Joe Hartsoe@Enron, Donna Fulton, Roger Fragua/HOU/ECT@ECT, James B Fallon/HOU/ECT@ECT, Michael Etringer/HOU/ECT@ECT, Terry W Donovan/HOU/ECT@ECT, Stacy Dickson@ECT, Ginger Dernehl/HOU/EES@EES, Rhonda L Denton/HOU/ECT@ECT, Jeff Dasovich/NA/Enron@Enron, Sean Crandall/PDX/ECT@ECT @ ECT, Tom Briggs/NA/Enron@Enron, t.briggs@enron.com, Stacey Bolton, Dennis Benevides/HOU/EES@EES, Dennis Benevides/HOU/EES@EES, Tim Belden/HOU/ECT@ECT, Robert Badeer/HOU/ECT@ECT, Phillip K Allen/HOU/ECT@ECT, Alan Comnes, Lysa Akin/PDX/ECT@ECT, Portland West Desk, assad@elektro.com.br, Alan Comnes/PDX/ECT@ECT, Alberto Levy/SA/Enron@Enron, Aleck Dadson/TOR/ECT@ECT, Allison Navin/Corp/Enron@ENRON, Amy Fabian/Corp/Enron@ENRON, Barbara A Hueter/NA/Enron@Enron, Bernadette Hawkins/Corp/Enron@ENRON, Bill Moore/NA/Enron@Enron, cristinah@elektro.com.br, Carlos Gustavo Azevedo/SA/Enron@Enron, Carmen Perez/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Carolyn Cooney/Corp/Enron@ENRON, Charles Yeung/HOU/ECT@ECT, Chauncey Hood/NA/Enron@ENRON, Chris Long/Corp/Enron@ENRON, Christi L Nicolay/HOU/ECT@ECT, Cynthia Sandherr/Corp/Enron@ENRON, Damon Harvey/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Dan Staines/HOU/ECT@ECT, Daniel Allegretti/NA/Enron@Enron, Dave Mangskau/Corp/Enron@ENRON, Donald Lassere/NA/Enron@Enron, Donna Fulton/Corp/Enron@ENRON, Eidy Catala/TRANSREDES@TRANSREDES, Elizabeth Linnell/NA/Enron@Enron, Frank Rishe/NA/Enron@Enron, Geriann Warner/NA/Enron@Enron, Ginger Dernehl/NA/Enron@Enron, Gisele S Braz/SA/Enron@Enron, Gloria Ogenyi/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Guillermo Canovas/SA/Enron@Enron, Harry Kingerski/NA/Enron@Enron, Howard Fromer/NA/Enron@Enron, James D Steffes/NA/Enron@Enron, Janine Migden/NA/Enron@Enron, Javier Pantoja/TRANSREDES@TRANSREDES, Jean R Dressler/NA/Enron@Enron, Jean Ryall/NA/Enron@ENRON, Jeff Brown/NA/Enron@Enron, Jeff Dasovich/NA/Enron@Enron, Jeffrey Keeler/Corp/Enron@ENRON, Joao Paixao/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Joe Allen/NA/Enron@Enron, Joe Connor/NA/Enron@Enron, Joe Hartsoe/Corp/Enron@ENRON, Joe Hillings/Corp/Enron@ENRON, Jose Bestard/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Joseph Alamo/NA/Enron@Enron, Kathleen Sullivan/NA/Enron@ENRON, Kerry Stroup/NA/Enron@Enron, Kikumi Kishigami/NA/Enron@Enron, Kirsten Bellas/NA/Enron@Enron, Lara Leibman/NA/Enron@Enron, Laurie Knight/NA/Enron@Enron, Leslie Lawner/NA/Enron@Enron, Linda J Noske/HOU/ECT@ECT, Linda Robertson/NA/Enron@ENRON, Lindsay Meade/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Lisa Yoho/NA/Enron@Enron, Lora Sullivan/Corp/Enron@ENRON, Luiz Maurer/SA/Enron@Enron, Lysa Akin/PDX/ECT@ECT, Marchris Robinson/NA/Enron@Enron, Marcia A Linton/NA/Enron@Enron, Marcie Milner/Corp/Enron@ENRON, Mary Hain/HOU/ECT@ECT, Maureen McVicker/NA/Enron@Enron, Melinda Pharms/HOU/ECT@ECT, Michelle Belzak/TOR/ECT@ECT, Mona L Petrochko/NA/Enron@Enron, Nancy Hetrick/NA/Enron@Enron, Patrick Keene/NA/Enron@Enron, Ray Alvarez/TRANSREDES@TRANSREDES, Rebecca W Cantrell/HOU/ECT@ECT, Ricardo Charvel/NA/Enron@Enron, Richard Ingersoll/HOU/ECT@ECT, Richard Shapiro/NA/Enron@Enron, Robert Frank/NA/Enron@Enron, Robert Hemstock/CAL/ECT@ECT, Robert Neustaedter/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Robin Kittel/NA/Enron@Enron, Ron McNamara/NA/Enron@Enron, Roy Boston/HOU/EES@EES, Rubena Buerger/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Sandra McCubbin/NA/Enron@Enron, Sarah Novosel/Corp/Enron@ENRON, Scott Bolton/Enron Communications@Enron Communications, Sergio Assad/SA/Enron@Enron, Stella Chan/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Stephen D Burns/Corp/Enron@ENRON, Steve Montovano/NA/Enron@Enron, Steve Walton/HOU/ECT@ECT, Steven J Kean/NA/Enron@Enron, Sue Nord/NA/Enron@Enron, Susan J Mara/NA/Enron@ENRON, Susan M Landwehr/NA/Enron@Enron, Terri Miller/NA/Enron@Enron, Thane Twiggs/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Tom Briggs/NA/Enron@Enron, Tom Chapman/HOU/ECT@ECT, Tom Delaney/Corp/Enron@ENRON, Tom Hoatson/NA/Enron@Enron, Tracy Cooper/Enron Communications@Enron Communications, Valeria Lima/SA/Enron@Enron, Vinio Floris/Corp/Enron@Enron, Xi Xi/Enron Communications@Enron Communications, Steven J Kean/NA/Enron@Enron, Jeffrey Keeler/Corp/Enron@ENRON, Christi L Nicolay/HOU/ECT@ECT, Sarah Novosel/Corp/Enron@ENRON, Robert Frank/NA/Enron@Enron, Lara Leibman/NA/Enron@Enron, Gloria Ogenyi/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Richard Shapiro/NA/Enron@Enron, Leslie Lawner/NA/Enron@Enron, Paul Kaufman/PDX/ECT@ECT, Aleck Dadson/TOR/ECT@ECT, Daniel Allegretti/NA/Enron@Enron, Howard Fromer/NA/Enron@Enron, Joe Hartsoe/Corp/Enron@ENRON, Roy Boston/HOU/EES@EES, Janine Migden/NA/Enron@Enron, Christie Patrick/HOU/ECT@ECT, Jane Wilson/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Rhonda L Denton/HOU/ECT@ECT, Kathleen E Magruder/HOU/EES@EES, Susan T Covino/HOU/EES@EES, Rebecca Carter/Corp/Enron@ENRON, Shelley Corman/ET&S/Enron, Janet Butler/ET&S/Enron, Kevin M Presto/HOU/ECT@ECT, Brad Richter/Enron Communications@Enron Communications, Greg Piper/Corp/Enron, Kevin McGowan/Corp/Enron@ENRON, Kim Ward/HOU/ECT@ECT, Leslie Reeves/HOU/ECT@ECT cc: Subject: I'm Leaving Enron I am going to be the Senior Regulatory Counsel at ISO New England starting on April 9, 2001. My last day in the Portland area will be March 31, 2001. I enjoyed working with you and wish you the best of everything. My new address will be: Mary Hain Senior Regulatory Counsel ISO New England Inc. One Sullivan Road Holyoke, MA 01040-2841 (413) 535-4000 mhain@ISO-NE.comMessage-ID: <16613255.1075847618244.JavaMail.evans@thyme> Date: Tue, 20 Mar 2001 01:03:00 -0800 (PST) From: steven.kean@enron.com To: leslie.lawner@enron.com Subject: Re: FERC's marketing affiliate conference Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Leslie Lawner X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf I heard you were a big hit. Leslie Lawner 03/20/2001 08:45 AM To: James D Steffes/NA/Enron@Enron, Shelley Corman/Enron@EnronXGate, Rebecca W Cantrell/HOU/ECT@ECT cc: Richard Shapiro/NA/Enron@Enron, Harry Kingerski/NA/Enron@Enron, Steven J Kean/NA/Enron@Enron Subject: FERC's marketing affiliate conference Becky and I attended FERC's gas marketing affiliate conference last week. Non-affiliated competitors continue to build straw men and describe abuses with no real evidence to back them up (the funny money argument and capacity hoarding are two examples. The funny money argument assumes marketing affiliates will bid above market rates for capacity because they excess payment is going to the corporate bottom line. Hoarding capacity to drive up price may be an issue, but it is not a marketing affiliate issue, as anyone can do it). FERC staff did not seem terribly sympathetic to the points made, but at least one FERC staffer seemed to believe that one solution would be to require the pipelines to offer capacity in smaller blocks to let smaller entities put together bids. FERC also indicated they were in fact auditing compliance, but in a non-public way. There were some concerns voiced which I agree with and there is an opportunity to file additional comments on Apr. 30. I would like to put the following in these comments: Evidence of affiliate abuse/preference is just not there. The best folks can do is make up stuff. We welcome FERC monitoring if that is needed to bring confidence to the marketplace that abuse is not occurring. But the issue is really whether we do have a crisis of confidence or merely a bunch of disgruntled competitors who are just seeking to neutralize the affiliated competitors). The FERC rules and the information reported (with a caveat) under those rules are adequate for detection and enforcement and deterrence. That said, the definition of marketing affiliate should be expanded to include affiliated electric generators, who are siting plants along affiliate pipelines. The pipeline 637 reporting and internet systems should allow users to download and manipulate transportation related data, which is not currently the case. We also need to address a deal on Northern where ENA took capacity at a discount, albeit after other parties had an opportunity to match our bid. This was a deal brought up in the conference. Let me know how this sounds. Thanks. Message-ID: <14063448.1075847624729.JavaMail.evans@thyme> Date: Fri, 2 Mar 2001 04:35:00 -0800 (PST) From: steven.kean@enron.com To: elaine.overturf@enron.com Subject: FW: 2001 Officer's Questionnaire Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Elaine Overturf X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf can you help me wiht this? ----- Forwarded by Steven J Kean/NA/Enron on 03/02/2001 12:39 PM ----- Vickie Nicholson/ENRON@enronXgate 03/02/2001 10:38 AM To: Steven J Kean/NA/Enron@Enron cc: Subject: FW: 2001 Officer's Questionnaire -----Original Message----- From: Vickie Nicholson Sent: Wednesday, February 07, 2001 9:22 PM To: Steven J Kean; Maureen McVicker Subject: 2001 Officer's Questionnaire Vickie EB4836 713-853-9864Message-ID: <507499.1075849867615.JavaMail.evans@thyme> Date: Sat, 14 Jul 2001 09:03:00 -0700 (PDT) From: steven.kean@enron.com To: kevinscott@onlinemailbox.net Subject: Re: Spoke with Jeff Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: quoted-printable X-From: Steven J Kean X-To: kevinscott@onlinemailbox.net X-cc: X-bcc: X-Folder: \Steven_Kean_Nov2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf I'm glad things are moving forward. I've talked with Dave briefly and will= =20 follow up with him again. Kevin Scott on 07/13/2001 10:14:01 AM Please respond to kevinscott@onlinemailbox.net To: Steve Kean cc: =20 Subject: Spoke with Jeff Steve =20 As planned, I spoke with Jeff this morning. It was a great call. I am=20 really excited about what is ahead. =20 We discussed the =01&title=018 issue. I don=01,t have any problems. We sh= ould go=20 with what is the best way to enter the organization. =20 =20 Jeff said he was going to touch base with Dave this morning to move the=20 process forward. I can=01,t wait for my interviews and to join the team.= =20 =20 Thanks for all of your help. =20 Kevin =20 ___________________________________ Contact Information E-mail kevinscott@onlinemailbox.net=20 Phone (213) 926-2626 Fax (707) 516-0019 Traditional Mail PO Box 21074 ? Los Angeles, CA 90021 ___________________________________ =20 Message-ID: <7925659.1075849868242.JavaMail.evans@thyme> Date: Thu, 12 Jul 2001 03:48:00 -0700 (PDT) From: steven.kean@enron.com To: jeff.dasovich@enron.com Subject: Congressman Ose loved your letter to Sen. Dunn Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Jeff Dasovich X-cc: X-bcc: X-Folder: \Steven_Kean_Nov2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf ---------------------- Forwarded by Steven J Kean/NA/Enron on 07/12/2001 10:48 AM --------------------------- From: Tom Briggs on 07/12/2001 10:43 AM To: Steven J Kean/NA/Enron@Enron cc: Subject: Congressman Ose loved your letter to Sen. Dunn Message-ID: <4304392.1075849870304.JavaMail.evans@thyme> Date: Fri, 6 Jul 2001 00:43:00 -0700 (PDT) From: steven.kean@enron.com To: sherri.sera@enron.com Subject: Re: FW: Follow up -- Council of Energy Advisors Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Sherri Sera X-cc: X-bcc: X-Folder: \Steven_Kean_Nov2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf I doubt that this is worth the trouble (i.e. running it through a conflict of interest check, ensuring no liability for actions taken on the advice, etc). From: Sherri Sera/ENRON@enronXgate on 06/21/2001 10:13 AM To: Steven J Kean/NA/Enron@Enron cc: Joannie Williamson/ENRON@enronXgate Subject: FW: Follow up -- Council of Energy Advisors Steve, we have no record of receiving the original invitation, but is this anything you would recommend? Please advise. Thanks, SRS -----Original Message----- From: @ENRON [mailto:IMCEANOTES-+3Cmobrien+40glgroup+2Ecom+3E+40ENRON@ENRON.com] Sent: Thursday, June 21, 2001 10:07 AM To: sreinar@enron.com Subject: Follow up -- Council of Energy Advisors Dear Jeffrey, I would like to follow up on the email regarding a personal invitation to join the Council of Energy Advisors that I recently sent you. I wanted to see if there are any additional questions I can answer. To reiterate, the Council is an organization of top engineers, corporate representatives, and energy experts that we pay(e.g. $250/hr) to consult via phone and email for our client base of more than 90 investment managers. I feel that your background and expertise would be an asset to the Council. Please feel free to register online at http://www.thecouncils.com/peapp.asp?copaid=75344579&invid=56 (just a quick 5-minute form). Also, you can learn more about our work at www.thecouncils.com. Thanks for your consideration, I look forward to working with you. Again, please contact me anytime if if you have any remaining questions. Best regards, Matt ================== Matthew O'Brien Gerson Lehrman Group Council of Energy Advisors 11 E. 44th St., 11th floor New York, NY 10017 (212) 838-6900 ext. 265 ============================================================= CONFIDENTIALITY NOTICE: This e-mail contains information that is privileged and confidential and subject to legal restrictions and penalties regarding its unauthorized disclosure or use. You are prohibited from copying, distributing or otherwise using this information if you are not the intended recipient. If you have received this e-mail in error, please notify us immediately by return e-mail and delete this e-mail and its attachments from your system. Thank you. Message-ID: <30106710.1075849870589.JavaMail.evans@thyme> Date: Thu, 5 Jul 2001 07:37:00 -0700 (PDT) From: steven.kean@enron.com To: terrie.james@enron.com Subject: Re: Funky Business Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Terrie James X-cc: X-bcc: X-Folder: \Steven_Kean_Nov2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf I have looked it over. I think they would do a good job. Another idea: Dick Foster (advisor to Enron's Board and Senior Director at McKinsey) has a great book out: "Creative Destruction". I was on a panel with him recently where he shared some of his research. He is a very good presenter; he knows Enron well; and his work is first rate. He might be a good addition. I have an idea on the breakout sessions. It needs some work but I'd like to talk it through with you. TERRIE JAMES@ENRON COMMUNICATIONS 07/05/2001 01:09 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Funky Business Steve, Have you had a chance to look at the book "Funky Business" and to give any thought to having Jonas present at the Management Conference? I know you have a thousand other things on your plate, not the least of which is California, so I understand if the answer is no. However, they've been contacted by someone else about the date so we may be forced to decide rather soon. On a related subject, I'm contemplating another topic for the conference. I'd seen an article in Fortune several months ago titled "Managing for the Slowdown." It talked about new challenges managers face in light of the economic downturn. (Most young managers have never experienced anything but boom times.) The article also outlines a dozen or so things companies should be thinking about now. (Use the downturn as a new opportunity to evaluate people. Overhaul your budget process. Don't stop communicating. etc.) I think it would be beneficial to address similar strategies and ideas with our managers. I'd love to get your thoughts on this idea. (Is it appropriate for Enron or am I just seeing the world through bleak-colored glasses?) Terrie James Sr. Director, Corporate Communication Enron Broadband Services 713-853-7727 (phone) 713-646-8887 (fax) terrie_james@enron.net ----- Forwarded by Terrie James/Enron Communications on 07/05/01 12:44 PM ----- Alison@isbspeakers.com 07/05/01 10:40 AM To: Terrie James/Enron Communications@Enron Communications cc: Subject: Funky Business July 5, 2001 Terrie: We received an e-mail today from the Funky Business office asking about the date we have on hold with Enron. They have another inquiry about that date and wondered if Enron is still considering using Jonas. If you are still considering them I will keep him on hold. And if they get a firm offer I will let you know immediately. We will have 24 hours to make an offer or release the hold once a firm offer comes in from another company. Hope you had a great 4th of July, Alison Kravetz 800-842-4483 x239 Message-ID: <5630964.1075849870851.JavaMail.evans@thyme> Date: Thu, 5 Jul 2001 00:31:00 -0700 (PDT) From: steven.kean@enron.com To: rpon@bellatlantic.net Subject: Re: Highlands Forum Wrap-up Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: X-cc: X-bcc: X-Folder: \Steven_Kean_Nov2001_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf Thank you. I enjoyed the discussion very much. The DoD has significant challenges, but if the group participating in the meeting was any indication, they have some first rate people working on those challenges. If I can be of further assistance, do not hesitate to call. "Dick O'Neill" on 07/02/2001 11:27:16 AM Please respond to To: cc: , Subject: Highlands Forum Wrap-up Dear Steve: just a brief note to say thank you again for your excellent presentation at last week's Highlands Forum. I believe that your remarks, along with those of Goran Lindahl, Dick Foster, and Phil Condit of Boeing, have caused a significant stir in the preparation for the congressionally mandated Quadrennial Defense Review and the Secretary's transformation planning. I also can tell you that the feedback from participants regarding your briefing has been terrific. We are reviewing all the material this week to begin the process of re-creating the session on the Secretary's webpage for the Forum, and I will be going over the video and audio clips for posting. Recognizing that your slides were proprietary, it would be most valuable if we could post as much of your powerpoint briefing as possible--whatever you feel comfortable with sharing. Whatever that turns out to be, if your staff could email that to me, I will make sure that only that, and not the original that you sent to me, gets posted. I am not sure where the senior leadership of the DoD will be going in the coming months, however, I know that the discussion of your experience at Enron and the experiences of your panel mates will have an influence. A more formal letter of thanks will be forthcoming, but for now, thank you again for joining us and helping to make this a memorable and most important Highlands Forum. Best regards, Dick Dick O'Neill The Highlands Group http://www.highlandsgroup.net 301-469-7400 301-469-5878 fax Message-ID: <2547548.1075863635973.JavaMail.evans@thyme> Date: Tue, 22 Aug 2000 09:38:00 -0700 (PDT) From: steven.kean@enron.com To: robin.kittel@enron.com, marc.phillips@enron.com, mary.schoen@enron.com, jeff.dasovich@enron.com, sandra.mccubbin@enron.com Subject: Thank you Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Robin Kittel, Marc Phillips, Mary Schoen, Jeff Dasovich, Sandra McCubbin X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\All documents X-Origin: KEAN-S X-FileName: skean.nsf thanks for your help in preparing for the Texas hearing. I think Texas legislators are viewing the California experience in the proper context and I think I was at least marginally articulate on the emissions issues as well. thanks again.Message-ID: <4243347.1075847979420.JavaMail.evans@thyme> Date: Tue, 27 Mar 2001 19:42:00 -0800 (PST) From: suzanne_nimocks@mckinsey.com To: skean@enron.com Subject: California Power Crisis Update (No. 10) Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: X-To: SKean@enron.com X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_3\Notes Folders\Calendar\Untitled X-Origin: KEAN-S X-FileName: skean.nsf We have been pulling together these weekly(sometimes more often) summaries for internal purposes. Would you find it helpful to be on the distribution list? Hope you are doing well. Look forward to touching base soon. ----- Forwarded by Suzanne Nimocks/HOU/NorthAmerica/MCKINSEY on 03/28/2001 03:41 AM ----- Memorandum TO: Pru Sheppard BCC: Suzanne Nimocks FROM: Pru Sheppard B. Venki Venkateshwara DATE: March 27, 2001 California Power Crisis Update (No. 10) DEVELOPMENTS THIS WEEK, 3/23/2001 The weeks highlights include: ? Continued indications that the issue of market power and possible remedies for it is likely to remain a high profile issue in California and elsewhere (both retroactively and prospectively) ? An ironical situation with respect to QFs in which QF power under contract is effectively being released into the market at higher prices ? A court order requiring Reliant to continue to sell power to the ISO even if it is not being paid in a full and timely manner ? Another Stage 3 emergency and rolling blackouts Market power There are continued indications that the issue of market power will not be settled simply. This week there was a lengthy and politically influential front page story in the New York Times about FERCs passive approach to policing generators (Critics Say U.S. Energy Agency Is Weak in Oversight of Utilities). The story was by Jeff Gerth and Joseph Kahn. (Jeff Gerth's 1992 story on the Whitewater deal is viewed by journalists to have been the origin of what eventually became a multi-year investigation of Bill Clinton.) The key issues are familiar: ? Does market power exist to a degree that warrants remedies such as price caps, refunds, and so on? ? If so, what is the basis for asserting that market power exists and what is the remedy? (See the discussion in the New York Times article on the "good hours" vs. "bad hours" approach and the associated political decision not to deal with "good hours"). ? Can market power be used as leverage to eventually settle generator bills in California at something less than 100 cents on the dollar. (The California ISO filed a complaint claiming $6 billion in overcharges this week.) The QF irony Through the 1990s, QF contracts were projected to be the source of stranded costs because they were priced "way above market." In recent months, in California, they look like a bargain (although some are not such great bargains because a portion of their price is tied to gas). You would think that the utilities would request QFs to maximize their output. But credit problems have created an ironical situation. The facts: ? PG&E and Edison have not been paying the QFs fully and promptly for some time. ? The QFs form a creditors committee and threaten to push PG&E and Edison into bankruptcy. (Some gas-fired QFs had to shut down because they did not have money to pay for the gas.) ? Last week's court decision allows MidAmerican/CalEnergy to essentially sell its power to others even though the QF contract "dedicates" the output to the purchasing utility. ? CalEnergy does so immediately, selling to El Paso. The Reliant Order A court ordered Reliant to continue to sell to the ISO, when requested, regardless of whether Reliant had been paid fully and promptly for past deliveries to the ISO. Reliant announced it will appeal the order. This is somewhat of a contrast to the QF situation except that the circumstances governing the 2 situations are probably different. The QF contracts pre-date the ISO and are with the utilities and most likely make no reference to providing power during emergencies. In fact, many QF contracts have the opposite provision: authority for the utility to cut takes during so-called "light load" periods. Stage 3 emergency and rolling blackouts--again There was another Stage 3 emergency in California ? with rolling blackouts this week. This prompted everyone to wonder why this was happening in March. Among the factors: ? Increased demand from summer-like temperatures ? Cutbacks in imports ? Loss of 1400 MW due to a transformer fire at an Edison plant ? Loss of about 3100 MW from QF plants that were forced to shutdown because they could not afford gas bills (VV) MARKET COMMENTARY (For easier printing of all the articles in this section use the file at the end of the section) Critics Say U.S. Energy Agency Is Weak in Oversight of Utilities By JEFF GERTH and JOSEPH KAHN 03/23/2001 The New York Times Page 1, Column 1 c. 2001 New York Times Company WASHINGTON, March 22 -- The pressure was intense when federal regulators met privately last month to debate remedies for soaring electricity prices in California. Officials of the Federal Energy Regulatory Commission, the agency whose mandate is to ensure ''just and reasonable'' electricity rates nationwide, had evidence that a few companies had been selling electricity to California at prices far above the cost of generating it. The agency faced an imminent deadline to challenge those prices or let the companies possibly pocket hundreds of millions of dollars in unfair profits. An internal memorandum laid out two choices. The agency could audit and punish ''bad actors,'' the companies that were exploiting the market. Or it could identify ''bad hours,'' when electricity shortages were most acute and spiking prices were arguably nobody's fault, and order refunds for only the most exorbitant prices. ''It may be easier to identify bad hours than bad actors,'' the memorandum said. The commission took the easier way. It decided not to investigate reports of abuses by companies, but issued an order that could require them to refund to the state utilities up to $124 million collected during a relatively few ''bad hours'' in January and February. That is hundreds of millions of dollars less than California might have claimed, since the most potential overcharging occurred during ''good hours,'' when power was more plentiful but prices were often just as extreme. The order ignored those hours. Today, in a criticism of the agency's lack of aggressiveness, California regulators estimated that generators had charged $6.2 billion above competitive levels over 10 months. They urged the agency to dig deeper, hoping it would demand more refunds or other stiff remedies. But the agency's track record -- one of complacency in the eyes of state officials -- leaves California regulators skeptical that Washington will confront the big power producers. The small, obscure agency, tucked behind the rail yard of Union Station here, has largely soft-pedaled its role as the electricity industry's top cop, even though it has wide authority to keep power companies in line. To keep rates reasonable, it can impose price caps, strip companies of the right to charge market rates, force them to return excessive profits and even suspend deregulation altogether. Instead, the agency has largely left it to private companies to pry open the $250 billion electricity industry, which has historically been controlled by monopoly utilities and state officials. The agency's defenders, including its chairman, Curt Hebert Jr., a fierce advocate of unfettered markets, say that its largely hands-off approach reflects the delicate balancing of competing interests -- a commitment to protect consumers while not stifling market forces. But politicians, utility executives, energy economists and local regulators say California's rolling blackouts and skyrocketing electricity prices are the signs of a market running amok. They accuse the agency of standing aside as companies manipulate their way to windfall profits. The agency's critics, who include one of its own commissioners and numerous staff members, say that its enforcement mission has been blunted by free-market passions and the influence of industry insiders in its ranks. When the agency began its first national investigation of high electricity prices last year, it named a newly recruited industry insider, Scott Miller, to lead the effort. Mr. Miller and his colleagues said in their report that there was ''insufficient data'' in California to prove any profiteering by generating companies. Yet his own former employer, PG&E Energy Trading, was at the time a subject of a civil antitrust investigation by the Justice Department that focused on electricity market abuses in New England. The agency has given state regulators a lead role in monitoring local power markets. Yet even as these regulators have urged the agency to be more aggressive in investigating suspicions that companies have abused their power in California, New England, the Midwest and the mid-Atlantic, they have frequently been ignored or rebuffed. Critics say that the agency began deregulation before it was ready or willing to make sure the markets worked effectively. They accuse it of showing favoritism to industry -- allowing companies, for example, to ignore requirements to file detailed reports of market transactions that are critical to proving accusations of market abuses. ''We need to wake up to the fact that this is a dysfunctional market that is being gamed and manipulated by those who participate in it,'' said William Massey, a commissioner of the agency who has become one of its leading critics. The agency's inaction, the critics say, leads to ''gaming'' -- jockeying for profits that does not necessarily involve illegality -- and outright market manipulation. Consumers and utilities are the victims, paying billions of dollars more for electricity than if the markets were truly competitive. Agency officials acknowledge that enforcement of market rules to curb gaming and manipulation had not been a high priority in previous years. But they defended their recent California order as proof that they intend to keep markets free of abuse. They add that the agency is also pressuring two generators to refund almost $11 million for possibly manipulating the California market last spring. Agency officials and some outside analysts say that poorly conceived deregulation plans by states, a shortage of power plants, rising natural gas prices, and even the weather have had more impact on electricity prices than abuses by companies or any failings by the agency. They say the agency must balance the competing interests of generators, local regulators and utility companies if it is to keep deregulation on track. ''We're trying to craft a system that gives breathing room to develop a market, but not so much room that undue market power punishes consumers,'' Mr. Hebert said. Fight Over Deregulation Today's debate traces back to the 1930's, when President Franklin D. Roosevelt backed legislation to break up utility monopolies. The Federal Power Act of 1935 gave the Federal Power Commission a mandate to ensure ''just and reasonable'' electricity rates. The Federal Power Commission was abolished in 1977 and replaced by the Federal Energy Regulatory Commission, an independent agency with 1,200 employees that also oversees oil pipelines and the natural gas market. The president appoints the chairman and four commissioners -- two Democrats and two Republicans with staggered terms of five years. Two Republican seats are currently unfilled. The deregulation of the electricity markets began in the late 1980's, after the agency had begun opening the gas markets. By 1996, the commissioners issued a landmark order that forced utility companies to open their transmission lines to other utilities and electricity wholesalers. The commission and many private economists expected that by prying open protected markets, electricity prices would immediately fall. That possibility set off a deregulation frenzy, most prominently in California, New York, New England and the mid-Atlantic states. Generating companies rushed to expand in the new, borderless market. But the agency's balancing act has grown more difficult as electricity deregulation has spread nationwide. Congress has forced it to trim its staff in recent years. Officials complain that investigating abuses in electricity markets strains their resources. And as the California crisis has worsened, the commissioners have begun sparring publicly among themselves about what to do. This week, Mr. Massey, a Democratic commissioner, and Mr. Hebert (pronounced AY-bear), a Republican, sat side by side before a House panel and argued diametrically opposed positions. Mr. Hebert said high prices in California ''were sending the right signals to get supply there.'' Mr. Massey called the prices that generators were charging ''unlawful'' and said that his agency, by not reining them in, ''is simply not doing its job.'' The agency's leadership has been in flux for months. Congressional and industry officials in Washington say President Bush is considering replacing Mr. Hebert, whom he named to the top post less than two months ago, with Pat Wood, who runs the Texas public utility commission. A White House spokeswoman had no comment on the reports. Though Mr. Hebert's positions are not far from those of the Bush administration, his relations with California leaders may have made his position tenuous. Mr. Hebert, a Mississippian who is a close ally of the Senate majority leader, Trent Lott, has warred with California politicians who have proposed new solutions to the crisis there. Mr. Hebert, who has served as a commissioner since 1997, has often taken the most ideologically free-market position of any commissioner. He flatly rejects the idea of price caps on electricity as hopelessly ineffective and contrary to market forces. When Gov. Gray Davis outlined a plan to have the state buy transmission lines to relieve utility companies' debt, Mr. Hebert's response was dismissive. ''It's not in the interest of the American public,'' he pronounced. Even as new electricity markets opened in the summer of 1999, they started producing nasty shocks. The mid-Atlantic region experienced some early volatility. As the turmoil grew, economists began raising the alarm about a phenomenon called ''market power,'' the ability of energy traders in the new national market to sustain prices above the competitive level. Proving such abuses is difficult, because it requires comparing tens of thousands of separate electricity transactions with the costs of the generators that initiated them. Joseph Bowring, who heads the market monitoring unit of the nonprofit entity that operates the mid-Atlantic transmission system, said that power companies there had exercised some market power. But only the Federal Energy Regulatory Commission, not local regulators, had the authority to collect the data to determine how much market power had been exercised and whether it had been abusive or not, he said. Mr. Bowring said he talked to agency officials about doing so. In the end, Mr. Bowring and several agency officials said, the agency chose not to investigate. The decision roiled some agency officials. Ron Rattey, a veteran agency economist, wrote a memorandum last June describing the staff as ''impotent in our ability to monitor, foster, and ensure competitive electric power markets.'' The staff, the memorandum said, did not even enforce a requirement that power companies file detailed quarterly reports listing essentially every sale they make. Such data would have been useful to Mr. Bowring. Local-Federal Clash Local regulators who want to ensure competitive prices often have to act on their own. Monitors in New England have intervened about 600 times since 1999 to correct prices they determined had been caused, at least in part, by market manipulation. The federal agency has sometimes chastised them for interfering too much. The industry, not surprisingly, shares that view. One vocal critic was Mr. Miller. Before the agency recruited him last July to head its division of energy markets, he was director of policy coordination for the national energy-trading unit of PG&E Corporation, the California holding company whose assets also include Pacific Gas and Electric, the California utility. Although the utility has lost billions of dollars during California's crisis, Mr. Miller's former unit has become one of the most profitable new energy traders nationwide. PG&E Energy Trading, by several estimates, is now the second-largest seller of electricity in New England. The company has had a rocky relationship with regulators. They intervened several times in 1999 and 2000 to retroactively cancel auctions they said produced excessive profits for PG&E and other companies. Mr. Miller denounced the practice, though he acknowledged in public testimony that his company sometimes charged ''very high'' prices when it could. ''One person's predatory pricing is another person's competitive advantage,'' Mr. Miller said at a public hearing on deregulation in Texas in 1999. New England regulators too often acted as ''judge, jury and executioner'' when overseeing the market, he said. One year later, Mr. Miller and his new colleagues at the federal agency got a chance to examine New England's problems from the regulators' perspective. Their Nov. 1 report attributed New England's frequent price gyrations to technical and regulatory flaws. As Mr. Miller's team was preparing its report, the Justice Department, whose threshold for stepping into possible industry wrongdoing is far higher than the agency's, began looking into whether price spikes in New England pointed to unlawful monopoly power or collusion, people contacted by the department during that inquiry said. One subject of the civil inquiry is possible price manipulation in one of New England's ancillary services markets, people contacted by the department said. They said the department was examining whether PG&E and two other companies tried to corner that market for several months early last year. PG&E confirmed that the Justice Department had contacted it, but denies wrongdoing and says it has cooperated with the department's requests. Mr. Miller has declined to comment on his role at PG&E or at the agency. His supervisors defended his work and said they had detected no conflict of interest between his work at PG&E and his duties at the agency. Those duties brought Mr. Miller to California last August. With electricity prices there soaring, he and his colleagues sat down with several utility executives at the agency's San Francisco office. One executive, Gary Stern, director of market monitoring for Southern California Edison, wanted the agency to stop what he suspected were market abuses by power generators. He provided a road map to help investigators figure out how power companies traded power contracts -- and whether they had manipulated the markets. But when Mr. Miller and his team approached 11 generators and marketers -- including his old employer -- a few weeks later, they did it their way. They asked eight questions, many of them imprecise, like: ''Describe your strategy for bidding generation resources into market.'' This question, Mr. Stern said in a recent interview, ''was equivalent to asking a suspected burglar how he spent his day.'' Some agency officials also thought the team should probe deeper. Mr. Rattey recommended that Mr. Miller seek the quarterly pricing reports that marketers were supposed to file. But his suggestion was not adopted, agency records show. Daniel Larcamp, Mr. Miller's supervisor, said ''there might have been more information that could have been obtained'' in the California inquiry. But he said the commission gave the staff only three months to finish, making it impossible to collect and analyze the reams of data involved. For Mr. Miller, agency documents show, the investigation was so time-consuming that he had no time to fill out the financial disclosure form required of new federal employees. Mr. Miller submitted his form in late January, after a reporter requested it. Agency lawyers approved the form, but only after he provided additional information about his job and compensation from PG&E. The lawyers said Mr. Miller's participation had been permissible because PG&E was not the subject of the investigation. When the staff report was issued on Nov. 1, it found high prices and problems in the design of the California market. But while the companies ''had the potential to exercise market power,'' the commission said, there was ''insufficient data'' to prove that they did. Some marketers saw the report as an exoneration. ''This has been looked at several times, most notably by the FERC and nobody has found any evidence of market manipulation and profiteering,'' Rob Doty, the chief financial officer of Dynegy Inc., told a reporter earlier this year. California Inquiry The agency has recently shown signs of wanting to apply pressure on generators. But its early efforts show how it is treading on new and uncertain turf. When the California crisis grew severe last December, the commission issued a refund order, a shot across the bow for generators charging high prices. It required them to submit detailed data any time they sold electricity in California for more than $150 per megawatt hour, considered at the time a fair estimate of the highest costs any of them faced. It also told generators that for the next several months, they could be forced to give refunds if the agency found that they had charged excessive prices. The commission also said that it would examine bidding practices and strategies for withholding generating capacity to ferret out any efforts to artificially raise prices. When the agency's own 60-day deadline for examining market data in January approached, however, it became clear that staff members had not made any detailed examination. Instead, staff members said, the agency scrambled to forge a last-minute compromise that would allow it to issue a statement opposing high prices in the state without a time-consuming investigation. During this scramble, a senior staff member, Kevin Kelly, suggested focusing on bad hours instead of bad actors. ''Our attempts to find illegal behavior or legal 'misbehavior' by sellers ('bad actors') always seems to fail,'' his memorandum said. It said that the agency could more easily blame high prices on acute shortages during the most critical hours. The suggestion won the day. The commission decided to limit its order to the hours when California declared a Stage 3 emergency, when supplies are critically low. Mr. Stern of Southern California Edison and several private-sector economists have attacked the economic logic of that order. They said that the commission has focused on times when prices might be legitimately high. The bigger worry: Generators can and often do sustain artificially high prices when supplies are not as tight, they say. Mr. Massey, the Democratic commissioner, dissented from the decision for those reasons. Because most high-priced transactions in January and February did not occur during bad hours, he argued, the commission effectively chose to bless as ''just and reasonable'' the hefty profits generators are making from the California crisis. ''The problem with my agency is that we're so carried away with the rhetoric of markets that we've gotten sloppy,'' Mr. Massey said. ''We're talking about electricity. It's the juice of the economy, so it's got to be available and reasonably priced.'' Williams defends pricing of electricity 03/23/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. TULSA, Okla. (AP) - Williams Cos. Inc. says it can justify the rates it charged for wholesale power, despite accusations from federal regulators that it sold over-priced electricity to California. Federal regulators claim Williams Energy Marketing and Trading Co., a unit of Tulsa-based Williams, owes California more than $40 million in refunds for power it sold to the state's Independent System Operator. The Federal Energy Regulatory Commission says that Williams is one of several power providers responsible for $124 million in overcharges from transactions in January and February. The Independent System Operator, which manages the state's power grid, claims the state was overcharged $6.2 billion by 21 wholesale power providers, including Williams, between May and February. Williams says the rates it charged California were fair and were based on production costs and market conditions. "Williams is confident that it performed within the guidelines established by the ISO," said Williams spokeswoman Paula Hall Collins. "We felt like we had worked within the regulations set up by ISO." According to the commission, power prices levied by Williams in January and February exceeded federal price ceilings based on the cost of natural gas and other market conditions. However, the price ceilings were established after the ISO accepted Williams' power prices, Collins said. The commission will review Williams' explanation and either accept the justification or order the company to pay refunds. Allegheny Energy makes big California connection 03/23/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. HAGERSTOWN, Md. (AP) - Allegheny Energy Inc. said Thursday it has agreed to sell $4.5 billion worth of power to California's electricity-purchasing agency over the next 10 years. The company said the contract call for Allegheny to provide up to 1,000 megawatts that the Hagerstown-based company has secured from western generating plants through its new energy trading division, Allegheny Energy Global Markets - formerly Merrill Lynch Global Energy Markets. "This is a win-win for both the state of California and Allegheny Energy. It provides a long-term source of fixed-price energy and should help to stabilize prices in California," said Michael P. Morrell, president of the Allegheny Energy Supply division. Allegheny Energy is the parent of Allegheny Power, which delivers electric energy and natural gas to parts of Maryland, Ohio, Pennsylvania, Virginia and West Virginia. Williams plans expansion of pipeline to help power Calif. 03/23/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. SALT LAKE CITY (AP) - The Williams Cos. plans to expands its Kern River pipeline, which runs through Utah, to provide more natural gas for generating plants in California. Williams' gas pipeline unit in Salt Lake City said Thursday that it plans to construct nearly 700 miles of additional pipeline that will run parallel to its existing Kern River line. Construction on the $1 billion project is expected to begin next year and is scheduled for completion in May 2003, said Kirk Morgan, director of business development for Kern River pipeline. "Shippers are seeking more access to natural gas from the Rocky Mountain basin, where producers are aggressively stepping up production," Morgan said. The new pipeline is expected to deliver about 900 million cubic feet of natural gas per day to markets in Utah, Nevada and California. Most of the gas will be used for generating plants planned in California. If all of the pipeline's capacity were used to generate electricity, it could produce about 5,400 megawatts. "That is enough to light around 4.5 million homes," Morgan said. The original Kern River line was completed in 1992. It enters Utah from Wyoming then crosses into the Salt Lake Valley near Bountiful. It turns south near the Salt Lake City International Airport then runs the length of the state before passing into southern Nevada and winding up near Bakersfield, Calif. It currently transports 700 million cubic feet of natural gas per day. Williams, based in Tulsa, Okla., recently filed an emergency application with federal regulators to install additional pumping stations on the line to increase its capacity by 135 million cubic feet per day. That $81 million pumping station project should be completed by July 1. During the 2002 construction period, the Kern River project will employ between 1,500 and 1,800 people. The company estimates annual property taxes it pays to Utah counties will increase from $3.5 million to about $7 million. Questar will be one of the customers on the new pipeline, Morgan said. The utility wants to supply additional gas to southern Utah cities, including St. George and Cedar City. "Our own pipelines serving southern Utah are at full capacity so this is an opportunity to transport additional gas into those areas from company-owned supplies in Wyoming," said Questar Gas spokeswoman Audra Sorensen. Calif Energy Commission OKs 3 Pwr Plants Worth 2,076 MW 03/23/2001 Dow Jones Energy Service (Copyright (c) 2001, Dow Jones & Company, Inc.) (This article was originally published Thursday) LOS ANGELES -(Dow Jones)- The California Energy Commission Wednesday approved three power plants worth 2,076 megawatts, two of which are scheduled to come on line by the end of 2002, a CEC spokesman said Thursday. The plants approved include BP Amoco PLC (BP) unit ARCO Western Energy's 500 megawatt Western Midway Sunset Project, slated to come on line in October 2002; Caithness Energy's 520 MW Blythe Power Plant, to come on line by Dec. 31, 2002; and Thermo Ecotek's 1,056 MW Mountainview Power Plant, scheduled to come on line in April 2003. All three of the new plants will be natural gas-fired combined-cycle plants. The $550 million Mountainview plant will be located in Southern California, near San Bernadino. The $300 million Western Midway-Sunset plant will be located in central Kern County, while the $250 million Blythe plant will be located in the city of Blythe in Riverside County. The latest approvals bring to 13 the total number of plants approved since April 1999 by the CEC, a spokesman said. Those plants will supply 8,405 MW to the state, which has seen rolling blackouts and spiking wholesale power prices in the last six months, in part due to lack of supply. -By Jessica Berthold, Dow Jones Newswires; 323-658-3872; jessica.berthold@dowjones.com Some CalEnergy Power Could Be Sold Outside Calif - CEO 03/23/2001 Dow Jones Energy Service (Copyright (c) 2001, Dow Jones & Company, Inc.) (This article was originally published Thursday) LOS ANGELES -(Dow Jones)- Some of CalEnergy Operating Corp's power could end up being sold outside of California, though that is not the company's intent, CalEnergy Chairman and CEO David Sokol said in a conference call Thursday. CalEnergy, an affiliate of MidAmerican Energy Holdings Co, which is majority owned by Warren Buffett's Berkshire-Hathaway (BRKA), was given legal authority Thursday to suspend 270 megawatts of power delivery to Edison International (EIX) utility Southern California Edison and sell on the open market, because SoCal Edison has not paid its bills since November. CalEnergy stopped supplying power to SoCal Ed immediately following the court ruling. "We stopped supplying power at 1 PM (PST) and have been selling to parties that will pay since then....We are selling it to marketers; our current marketing agent is El Paso Corp (EPG) and they will sell it for us," Sokol said. Sokol added that while it was his company's intention to have its power sold to California, that could not be guaranteed. "We leave the energy selling to El Paso....We've directed them that we would like the power to stay in California but we can't stop them," from selling out of state, Sokol said. Wholesale prices on the open market are about $400-$500 a megawatt-hour, three times more than what the company had received under its contract with SoCal Ed. The court's ruling did not address the $45 million SoCal Ed still owes CalEnergy for November and December power, and Sokol said that his company's separate lawsuit on that matter sought to attach the utility's assets as payment for that debt. Sokol said the court's ruling had "significant implications" for the entire community of small, independent generators, known as qualifying facilities or QFs, who have not received payment from SoCal Ed. "Edison's own lawyer said it best....that every QF in the state will begin to mitigate if the judge allowed us (to sell on the open market)," Sokol said. Sokol said his company was prepared to push SoCal Ed into involuntary bankruptcy Friday if CalEnergy hadn't won the case, but said he couldn't speculate whether other QFs may be more or less inclined to do so as a result of the court outcome. A group of renewable power suppliers, owed more than $100 million from SoCal Ed, said late Wednesday they want state lawmakers to release them for their supply contracts with PG&E Corp. (PCG) unit Pacific Gas & Electric and SoCal Ed until the utilities are restored to financial stability. The utilities claim close to $13 billion in undercollections due to an inability to pass high wholesale power costs to customers under a rate freeze. In a statement, SoCal Ed said it opposed CalEnergy's bid to suspend its QF contract because the utility believed Gov. Gray Davis and state regulators are close to resolving "very legitimate financial concerns of CalEnergy and other QF suppliers." SoCal Ed said it was concerned that CalEnergy's request to sell to third parties would lead to a major supply shortage in California. The utility said it has informed the QFs that it is working to resolve the issue without giving unfair advantage to one class of creditors. While many of the state's large power suppliers have been paid by on a forward basis for the power they sell into California, the QFs, which make up one-third of the state's total power supply, haven't been paid by SoCal Ed since November. PG&E has made partial payments to its QFs. -By Jessica Berthold, Dow Jones Newswires; 323-658-3872, jessica.berthold@dowjones.com (Jason Leopold contributed to this article.) California and the West Judge Frees Small Firm From Edison Contract KEN ELLINGWOOD; DAN MORAIN TIMES STAFF WRITERS 03/23/2001 Los Angeles Times Home Edition A-3 Copyright 2001 / The Times Mirror Company El CENTRO -- California's balance of electrical power shifted slightly Thursday when an Imperial County judge temporarily freed a small geothermal energy producer from its contract with Southern California Edison, allowing it to sell power on the open market. The ruling by Superior Court Judge Donal B. Donnelly could lead to a mass exodus by hundreds of small energy producers that have been selling power to the state's financially troubled utilities for months without getting paid. At the same time, it may have staved off plans by a group of the small generators to send Edison into involuntary bankruptcy as early as today. In Sacramento, energy legislation pushed by Gov. Gray Davis passed in the state Senate but foundered in the Assembly. The measure was intended to ensure that the state gets repaid for the electricity that it has been buying on behalf of Edison and Pacific Gas & Electric, which say they lack the cash and credit to purchase power. The bill also was supposed to guarantee that the small, alternative energy producers--which together provide nearly a third of the state's power--get paid. But Assembly Republicans opposed it, saying it hadn't been given sufficient scrutiny. The impact of the small producers was made clear in Imperial County, where Edison's failure to pay CalEnergy, the county's biggest property taxpayer, had outsize implications. CalEnergy had put county officials on notice that it was about to miss a $3.8-million property tax payment. The uncertainty had prompted the tiny Calipatria Unified School District to postpone a bond issue for badly needed school repairs. Among CalEnergy Chairman David Sokol's first acts after the judge's ruling Thursday was to promise Imperial County Supervisor Wally J. Leimgruber that the company would pay its property taxes on time. "That is great news," Leimgruber said. Within hours of its court victory, CalEnergy had stopped transmitting geothermal power to Edison and begun selling it to El Paso Energy, a marketing company that purchased the energy at prevailing rates and resold it on the spot market. Some of the more than 700 other small energy producers in the state said they were considering similar action against Edison and Pacific Gas & Electric. "We absolutely need the right to sell to third parties," said Dean Vanech, president of Delta Power, a New Jersey company that owns five small gas-fired plants in California and is owed tens of millions of dollars by Edison. Sokol praised the Imperial County judge and said his company simply wanted the authority to sell its power "to a credit-worthy company that, in fact, pays for the power." An Edison spokesman said the company was disappointed with the ruling, but sympathized with CalEnergy and other small producers because "California's power crisis has placed [them] in financial distress, just as it has placed utilities in financial distress." Edison expressed concern that the ruling would prompt CalEnergy and other small producers to sell their power out of state. Sokol said CalEnergy had specifically told El Paso Energy that it hoped its power would remain in California, "but if someone wants to pay a higher price out of state, we can't stop them." Sokol said that Edison still owes CalEnergy $140 million and that the company--along with seven other small producers--had been prepared to file a petition in federal bankruptcy court in Los Angeles today forcing the utility into involuntary bankruptcy. He said his company no longer intends to do so, and he believed--but wasn't certain--that the other companies would shelve their plans. Edison filed papers Thursday with the federal Securities and Exchange Commission showing that it owed $840 million to various small electricity producers, many of which rely on renewable energy sources such as geothermal steam, solar energy or wind. The alternative energy producers--and utilities--strenuously objected to the legislation considered in Sacramento on Thursday. The bill, spelling out how the utilities are to pay the state and the small producers, passed the Senate on a 27-9 vote, the exact two-thirds margin required. But it stalled in the Assembly on a 46-23 party-line vote, well short of two-thirds. "When I was a citizen back in Lancaster, I heard these stories about pieces of legislation that were cooked up late at night, that . . . were cut and pasted together and were rammed through by the Legislature," Assemblyman George Runner (R-Lancaster) said. "That's exactly what we have before us." The alternative electricity generators, including oil companies, warned that they would lose money under the Davis proposal, while representatives of Edison and PG&E, which have amassed billions in debt in the worsening energy crisis, said the legislation would push them deeper into the hole. "There isn't enough money," Edison attorney Ann Cohn testified at a Senate hearing on the bill Thursday. "It is a very simple question: Dollars going out cannot be greater than dollars coming in." The bill, AB 8X, combined several proposals. First, it sought to clarify earlier legislation by spelling out that Edison and PG&E must pay the state all money collected from consumers for electricity that the state has been buying. Additionally, the bill would turn over to the California Public Utilities Commission the thorny issue of how much to pay alternative energy producers for their electricity. Wind, solar and geothermal producers might agree to the prices offered by the administration. But most of the alternative energy producers, including Chevron and British Petroleum, use natural gas to generate electricity through "cogeneration," a process of creating steam for both electric generation and heat. With natural gas prices high, they contend, they would lose money at the prices Davis is offering. * Ellingwood reported from El Centro, Morain from Sacramento. Times staff writers Mitchell Landsberg in Los Angeles and Jenifer Warren, Nancy Vogel and Carl Ingram in Sacramento contributed to this story. (BEGIN TEXT OF INFOBOX / INFOGRAPHIC) Power Points Background The state Legislature approved electricity deregulation with a unanimous vote in 1996. The move was expected to lower power bills in California by opening up the energy market to competition. Relatively few companies, however, entered that market to sell electricity, giving each that did considerable influence over the price. Meanwhile, demand has increased in recent years while no major power plants have been built. These factors combined last year to push up the wholesale cost of electricity. But the state's biggest utilities--Pacific Gas & Electric and Southern California Edison--are barred from increasing consumer rates. So the utilities have accumulated billions of dollars in debt and, despite help from the state, have struggled to buy enough electricity. * Daily Developments * Overcharges by major electricity suppliers were estimated at $6.3 billion, up from the $5.5 billion first thought, California's power grid operator said. * Electricity producers denied that they have profiteered and argued that Cal-ISO's figures don't take into account all their costs. * A Superior Court judge's ruling Thursday freeing a small producer from its contract with Edison could lead to a mass exodus by small energy producers that have been selling to the utilities without getting paid. * Verbatim "If these guys have such high costs ... how come they're making so much money?" --Gary Stern, Edison's director of market monitoring and analysis, referring to power producers Complete package and updates at www.latimes.com/power Grid Operator Says California Paid Too Much for Power By Rebecca Smith and John R. Emshwiller Staff Reporters of The Wall Street Journal 03/23/2001 The Wall Street Journal A2 (Copyright (c) 2001, Dow Jones & Company, Inc.) California's electric-grid operator said power suppliers may have overcharged the state and its utilities by $6.2 billion, or a total of 30%, in a 10-month period, and has asked federal regulators to step up their policing of electricity markets. Meanwhile, a California state judge handed down a decision involving small power producers that could result in more electricity being made available in the energy-starved state, but likely at greater cost to the state government. The $6.2 billion figure was contained in a market analysis by the California Independent System Operator filed yesterday with the Federal Energy Regulatory Commission. The ISO says it isn't seeking a refund -- for the May through February period -- because its analysis lacked important market data. For example, it estimated costs for 21 suppliers based on published prices for natural gas, not on specific data showing what each generator actually paid for the fuel. "We don't know how much gas actually was purchased at spot-market prices," said Anjali Sheffrin, the ISO's head of market analysis. Charles Robinson, general counsel for the ISO, said FERC needs to become "more aggressive about market-power mitigation." The ISO's filing, he said, was intended to push the agency in that direction, since FERC is responsible for policing deregulated electricity and natural-gas markets. He said that if the FERC doesn't act, the state of California may find ways to discipline the market, such as through the state attorney general's office. The attorney general has been investigating the state's electricity market for many months but hasn't brought any court action. Dynegy Inc., a big owner of power plants in California, said it will provide additional information to FERC supporting its position that the prices it has charged for power have been "just and reasonable." The Houston company was one of 13 energy suppliers that the FERC this month ordered to pay refunds totaling $124 million or "show cause" why it should be excused. Dynegy said the FERC analysis was flawed, because it used "inaccurate" prices for natural gas and pollution credits. While big power producers such as Dynegy came under attack, small power producers won a potentially significant victory in a state court in Southern California's Imperial County. A judge granted 10 geothermal plants operated by the CalEnergy Co. unit of MidAmerican Energy Holdings Co., a unit of Berkshire Hathaway Inc., of Omaha, Neb., permission to suspend deliveries of electricity to Southern California Edison Co. and instead seek other buyers. These plants, known as "qualifying facilities," are under long-term contract to Edison and other utilities but haven't been paid for months. Edison, a unit of Edison International, of Rosemead, Calif., says it has been unable to pay hundreds of millions of dollars in power bills to CalEnergy and others because it has been driven to the brink of insolvency by the state's failed utility-deregulation plan. While the CalEnergy case involves only about 320 megawatts of power, the repercussions could be far greater. Collectively, hundreds of qualifying facilities, or QFs, produce as much as 30% of California's electricity needs. QFs totaling 3,000 megawatts cut their production in recent weeks for lack of payment. This loss of output was a significant cause of the blackouts that hit California this week. Observers believe the CalEnergy court decision could give other QFs an opportunity to sell power in the open market, presumably to the state government that now is California's biggest energy buyer. An hour after the court decision yesterday, some 400 megawatts of power came back into the market, the ISO said. However, additional QF power sales on the open market could substantially increase the state's tab. Already, the state has allocated more than $4 billion for electricity purchases. Separately, Edison said in a Securities and Exchange Commission filing that its unpaid power bills could contribute to a write-off of as much as $2.7 billion for 2000. Because of uncertainty caused by the energy crisis, the company hasn't yet reported year-end earnings. Power regulators debate who should be exempted from blackouts By KAREN GAUDETTE Associated Press Writer 03/22/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. SAN FRANCISCO (AP) - State power regulators said Thursday they are working to exempt all California hospitals, regardless of size, from rolling blackouts. The Public Utilities Commission met with representatives from hospitals and investor-owned utilities after Los Angeles lawyer David Huard filed an emergency motion with the PUC on behalf of more than 500 hospitals throughout the state. Under PUC rules, hospitals with more than 100 beds are exempt from losing electricity during power emergencies. But during rolling blackouts Monday, at least a dozen hospitals from Long Beach to Clearlake were forced to use their backup generators. Pacific Gas and Electric Co. and Southern California Edison Co. say they blacked out those hospitals specifically because they have backup generators. Both utilities said the temporary blackouts were part of their overall efforts to spread the burden of blackouts over more of their customers. Linda Ziegler, director of business and regulatory planning for SoCal Edison, said the utility is following state law and will implement new guidelines if the PUC changes them. But hospitals say there is a 10-second lapse before emergency generators kick in, which could harm patients in the midst of delicate surgical procedures such as organ transplants or brain surgery. "You wouldn't fly a plane with only your emergency backup systems in place," said Ann Mosher, a spokeswoman for California Pacific Medical Center in San Francisco. "Backup generators are just that, they're not designed to keep the hospital up and running at full capacity." Ziegler said that power still goes out for reasons beyond the energy crisis, from incidents like lightning or a knocked-down power pole. "If it's a serious problem for the hospital it's certainly something they should be address just from an ongoing basis," she said. The exemption would cover all hospitals within the territory of the state's investor owned utilities PG&E, Southern California Edison and San Diego Gas and Electric. Hospitals within the range of municipally owned utilities, such as the Los Angeles Department of Water and Power, are separately regulated. For more than two decades, prisons, hospitals with more than 100 beds and emergency services such as fire and police departments have been classified as "essential" services, and are exempted from blackouts by order of state power regulators. After rolling blackouts began darkening the state in January, many other public service groups began seeking relief from power interruptions, including transit systems, schools and water districts. --- On the Net: http://www.cpuc.ca.gov Federal Judge Orders Reliant To Keep Selling Pwr To Calif 03/22/2001 Dow Jones Energy Service (Copyright (c) 2001, Dow Jones & Company, Inc.) SACRAMENTO, Calif. (AP)--A federal judge issued a preliminary injunction Wednesday ordering a major electricity wholesaler to continue selling to California despite its fear that it will not get paid. U.S. District Judge Frank C. Damrell Jr. said Californians were at risk of irreparable harm if Reliant Energy (REI) stopped selling power to the Independent System Operator, which oversees the state's power grid. The ISO buys last-minute power on behalf of utilities to fill gaps in supply. Damrell dismissed Reliant's attempt to force the state Department of Water Resources to back the ISO's purchases for the state's two biggest utilities. The state has been spending about $50 million a day on power for Pacific Gas and Electric Co. and Southern California Edison, both denied credit by suppliers after amassing billions of dollars in debts. The judge said he had no authority to force the DWR to pay for that power. Gov. Gray Davis has said the state isn't responsible for purchasing the costly last-minute power ISO buys for Edison and PG&E, despite a law authorizing state power purchases on the utilities' behalf. ISO attorney Charles Robinson said the ruling gives ISO operators "a tool to assist them in keeping the lights on in California." "Had the decision gone the other way, one could expect other generators to simply ignore emergency orders," Robinson said. Damrell's preliminary injunction will remain in effect until the Federal Energy Regulatory Commission rules on the matter. Damrell denied the ISO's request for preliminary injunctions against three other wholesalers - Dynegy Inc. (DYN), AES Corp. (AES) and Williams Cos. (WMB) - which agreed to continue selling to the ISO pending the FERC ruling. Spokesmen for Reliant, Dynegy, AES and Williams were out of the office Wednesday night and didn't immediately return calls from The Associated Press seeking comment on the ruling. The ISO went to court in February after a federal emergency order requiring the power sales expired. The judge then issued a temporary restraining order, requiring the sales, but dropped it after the suppliers agreed to continue sales to California pending his Wednesday ruling. The ISO said it would lose about 3,600 megawatts if the suppliers pulled out, enough power for about 2.7 million households. One megawatt is enough for roughly 750 homes. Grid officials said Reliant's share alone is about 3,000 megawatts. Reliant said the amount at issue actually is less than a fourth of that, because most of its output is already committed under long-term contracts. Reliant, which currently provides about 9% of the state's power, worries it won't get paid due to the financial troubles of PG&E and Edison. PG&E and Edison say that together they have lost about $13 billion since June due to soaring wholesale electricity costs that California's 1996 deregulation law bars them from passing onto customers. Calif Small Pwr Producers To Shut Plants If Rates Capped By Jason Leopold Of DOW JONES NEWSWIRES 03/22/2001 Dow Jones Energy Service (Copyright (c) 2001, Dow Jones & Company, Inc.) LOS ANGELES -(Dow Jones)- Many of California's independent power producers late Wednesday threatened to take their small power plants offline this week if state lawmakers pass legislation that would cap the rates the generators charge for electricity they sell directly to the state's three investor-owned utilities. At issue is a bill that would repeal a section of the state's Public Utilities Code, which links the 688 so-called qualifying facilities' electricity rates to the monthly border price of natural gas. Lawmakers, however, are poised to pass the legislation. State regulators are then expected to approve a measure that would restructure the fluctuating rates the QFs charge PG&E Corp. (PCG) unit Pacific Gas & Electric, Edison International (EIX) unit Southern California Edison, and Sempra Energy (SRE) unit San Diego Gas & Electric from $170 a megawatt-hour to $69-$79/MWh, regardless of the price of natural gas. Whereas each of the 688 QF contracts differed, largely because natural gas prices are higher in Southern California than Northern California, the state wants the QFs to sign a general contract with the utilities. The cogeneration facilities, which produce about 5,400 megawatts of electricity in the state, said the rates are too low and they won't sign new supply contracts with the utilities. "For $79/MWh, natural gas would have to be $6 per million British thermal unit at the Southern California border," said Tom Lu, executive director of Carson-based Watson Cogeneration Company, the state's largest QF, generating 340 MW. "Our current gas price at the border is $12.50." Other gas-fired QFs said the state could face another round of rolling blackouts if lawmakers and state regulators pass the legislation, which is expected to be heard on the Senate floor Thursday, and allow it to be implemented by Public Utilities Commission next week. Lu, whose company is half-owned by BP Amoco PLC (BP) and is owed $100 million by SoCal Ed, said the proposals by the PUC and the Legislature "will only make things worse." David Fogarty, spokesman for Western States Petroleum Association, whose members supply California with more than 2,000 MW, said the utilities need to pay the QFs more than $1 billion for electricity that was already produced. State Loses 3,000 MW QF Output Due Of Financial Reasons The QFs represent about one-third, or 9,700 MW, of the state's total power supply. Roughly 5,400 MW are produced by natural gas-fired facilities. The rest is generated by wind, solar power and biomass. About 3,000 MW of gas-fired and renewable QF generation is offline in California because the power plant owners haven't been paid hundreds of millions of dollars from cash-strapped utilities SoCal Ed and PG&E for nearly four months. Several small power plant owners owed money by SoCal Ed have threatened to drag the utility into involuntary bankruptcy if the utility continues to default on payments and fails to agree to supply contracts at higher rates. The defaults have left many of the renewable and gas-fired QFs unable to operate their power plants because they can't afford to pay for the natural gas to run their units. Others continue to produce electricity under their contracts with the state's utilities but aren't being paid even on a forward basis. The California Independent System Operator, keeper of the state's electricity grid, said the loss of the QF generation was the primary reason rolling blackouts swept through the state Monday and Tuesday. Gov. Gray Davis, recognizing the potential disaster if additional QFs took their units offline, held marathon meetings with key lawmakers Monday and Tuesday to try and hammer out an agreement that would get the QFs paid on a forward basis and set rates of $79/MWh and $69/MWh for five and 10 year contracts. He also said he would direct the PUC to order the utilities to pay the QFs for power they sell going forward. "After next week the QF problem will be behind us," Davis said Tuesday. "We want to get the QFs paid...the QFs are dropping like flies...and when that happens the lights go out." But this just makes the problem worse, said Assemblyman Dean Florez, D-Shafter, a member of the Assembly energy committee. "I don't know how we are going to keep the lights on," Florez said in an interview. "Many of these congenerators are in my district. They said if the legislation doesn't change they are going offline. This compounds the issue of rolling blackouts, especially now when we need every megawatt." Davis, who didn't meet with people representing the QFs, said he was handing the QF issue to the PUC because lawmakers failed to pass legislation that would have set a five-year price for natural gas and allow the QFs to sign individual contracts with the utilities. In addition, SOCal Ed opposed the legislation, saying the rates should be below $50/MWh. Some renewable power producers said they aren't vehemently opposed to the new rate structure because it guarantees them a higher rate than what was originally proposed. QFs Want Third Party Supply Contracts John Wood, who represents the SoCal Ed Gas Fired Creditors Committee, one of a handful of groups that have formed since January to explore options on getting paid by the utilities, said his group of gas-fired QF creditors want to be released from their supply contracts and sell to third parties. "Under our plan, we would be permitted to sell electricity to third parties (including the state Department of Water Resources) until a resolution to the crisis can be accomplished," wood said. Hal Dittmer, president of Sacramento-based Wellhead Electric in Sacramento, which is owed $8 million by PG&E, has 85 MW of gas-fired generation units offline. Under the state's plan, Dittmer said he risks going out of business. "I can't buy natural gas for what I would be paid under this decision," he said. "The state needs to quit kidding themselves that they don't need to raise electricity rates. All of this is being driven by an artificial construct that California can avoid raising rates." -By Jason Leopold, Dow Jones Newswires; 323-658-3874; jason.leopold@dowjones.com Power Strain Eases but Concerns Mount Energy: Officials say summer prices will be high, and a state report shows that contracts with generators are far short of goals. DAN MORAIN; JENIFER WARREN TIMES STAFF WRITERS 03/22/2001 Los Angeles Times Home Edition A-3 Copyright 2001 / The Times Mirror Company SACRAMENTO -- California's fragile electricity system stabilized Wednesday, but a Davis administration report suggested troubles ahead because the state could be forced to buy most of its power for the coming summer on the costly and volatile spot market. After two days of statewide blackouts, power plants that had been shut down were cranked up. Unseasonable heat tapered off. The operators of the statewide power grid relaxed their state of emergency. But plenty of ominous signs remained. Many small producers remained shut down, skeptical about Gov. Gray Davis' plan for utilities to pay them. State Controller Kathleen Connell issued a sharp warning about the high cost of the state's foray into the power business and announced that she will block an administration request that she transfer $5.6 billion into an account that could be tapped to pay for state purchases of electricity. And a report from the administration summarizing contracts between Davis and independent power generators showed that the state has signed contracts for only 2,247 megawatts of electricity, significantly less than the 6,000 to 7,000 megawatts previously claimed. While there are agreements in principle for the full amount, the report notes that generators can back out of the contracts for a variety of reasons, including the state's failure to sell bonds to finance power purchased by July 1. The Legislature has approved plans to sell $10 billion in bonds, but none have yet been issued. "We are exposed enormously this summer," Senate Energy Committee chairwoman Debra Bowen (D-Marina del Rey) said after looking at the report. "We owe the people the truth about how difficult this summer is going to be. We don't have a power fairy." Perhaps most significant, the report suggests that the contracts fall significantly short of Davis' stated goal of buying no more than 5% of the state's summer needs on the spot electricity market, where prices can be many times those of long-term contracts. After reading the report, Frank Wolak, a Stanford University economist who studies the California electricity market, said the numbers suggested that the state's long-term contracts will cover less than half of what the state will need this summer. "We're definitely short this summer, next summer and the summer of 2003," he said. California was forced to start buying electricity in December--at a cost of $50 million a day--because producers refused to sell to Southern California Edison and Pacific Gas & Electric. The two utilities amassed billions of dollars in debt when prices for wholesale power soared on the spot market. Vikram Budhraja, a consultant retained by Davis to negotiate deals with generators, said the report represents a "work in progress." He said the state may yet sign new contracts. However, Wolak said the contract figures confirm what he and others have been dreading: that summer is going to be rife with rolling blackouts unless serious steps to cut demand are taken immediately. Wolak and other experts say large industrial customers must be switched to real-time meters and pricing to persuade them to use the bulk of their energy at times of low demand. The head of the Energy Foundation, a San Francisco-based nonprofit that promotes sustainable sources of power, made the same proposal to Davis on Wednesday. "The government need not ask customers to swelter in the dark this summer," foundation President Hal Harvey argued in a letter. He also proposed a crash campaign to boost sales of efficient appliances and lightbulbs. He said the state needs to take over the utilities' contracts with alternative energy providers to ensure they stay in business, and sign new contracts for 1,500 megawatts of new wind power--the cheapest, fastest and cleanest source of new supply. Davis had proposed a formula Tuesday to force private utilities to pay the alternative producers, some of which have not been paid since November. But some of them warned Wednesday that Davis' plan offers them little incentive to turn on their generators. Alternative energy producers supply more than a quarter of the electricity consumed in California. Many producers generate electricity from wind, sun and geothermal sources. But most of them generate power using natural gas--and the cost of natural gas has been soaring. Several natural gas users said Davis' plan, which caps rates, won't cover their fuel costs. Davis assumes that the price of natural gas will fall. But small generators say they don't have sufficient purchasing power or sophistication to gamble on future prices. The Public Utilities Commission is expected to approve Davis' proposal next week. It offers producers two choices: 7.9 cents a kilowatt-hour if they agree to supply power for five years, or 6.9 cents a kilowatt-hour over 10 years. "The price of natural gas is higher than that," said Marty Quinn, executive vice president and chief operating officer of Ridgewood Power LLC, which owns three natural gas-fired co-generation plants. "If we operate, we'll lose money." Ridgewood is not operating, having been cut off by gas suppliers. The company sued PG&E last month seeking overdue payments and release from its contracts with the utility. A hearing is scheduled in El Centro today in another lawsuit filed by a small energy producer, an Imperial Valley geothermal producer that sued Edison for refusing to let it break its contract and sell on the open market. CalEnergy says Edison owes it about $140 million for energy sold since November. A company spokesman, Jay Lawrence, said CalEnergy was going ahead with its suit despite Davis' proposal. "We've had promises before," he said. In other developments: * A federal judge in Sacramento on Wednesday ordered Reliant Energy of Houston, a major producer, to continue selling power to California during emergencies, despite the company's argument that it may not be fully reimbursed. The order will remain in effect for 60 days or until the U.S. Federal Energy Regulatory Commission decides a related case. * Connell said the state budget surplus has shrunk to $3.2 billion because the state has spent roughly $2.8 billion on electricity. She criticized the administration for withholding basic information about state finances, and said she will begin an audit on Monday of the Department of Water Resources, which is responsible for purchasing power. Davis' aides said Connell took her action because the Democratic governor endorsed one of Connell's foes this week in the race for Los Angeles mayor, former Assembly Speaker Antonio Villaraigosa. A Connell aide scoffed at the notion. * Sen. Dianne Feinstein (D-Calif.) said she "never has had a response" from President Bush after writing him last month for an appointment to discuss the California energy crisis. In a wide-ranging lunch talk with reporters in Washington, she deplored the fact that "huge, huge profits are being made" in the California crisis, and said "an appropriate federal role" would be to guarantee a reliable source of power until the state can get nine new generators online. * Times staff writers Mitchell Landsberg in Los Angeles and Robert L. Jackson in Washington contributed to this report. (BEGIN TEXT OF INFOBOX / INFOGRAPHIC) Power Points Daily Developments * Wholesale electricity suppliers overcharged by about $5.5 billion between May and last month, and that money should be refunded to taxpayers and utilities, according to a Cal-ISO report. * The state may have to buy most of its power for summer on the costly spot market, which could drive consumers' bills up, a Davis administration report concludes. * State Controller Kathleen Connell said she will block a request by the Davis administration for $5.6 billion for state purchases of electricity. Verbatim "We owe the people the truth about how difficult this summer is going to be. We don't have a power fairy." Debra Bowen (D-Marina del Rey), Senate Energy Committee chairwoman CPUC Must Address Rates In QF Repayment Order - SoCal Ed 03/21/2001 Dow Jones Energy Service (Copyright (c) 2001, Dow Jones & Company, Inc.) LOS ANGELES -(Dow Jones)- Any order from the California Public Utilities Commission requiring utilities to pay small, independent generators going forward must determine how that could be done within the existing rate structure, a spokesman for Edison International (EIX) utility Southern California Edison said Wednesday. The utility was responding to a PUC proposed decision that would require utilities to pay small generators, called qualifying facilities, $79 a megawatt hour within 15 days of electricity delivery. The decision will be voted March 27 by the CPUC. "We're still reviewing (the decision) and should have more to say in a day or two. To the extent that the commission orders us to pay going forward of course we will. But it needs to address how we will pay the QFs," a SoCal Edison spokesman said. SoCal Edison and PG&E Corp. (PCG) unit Pacific Gas & Electric Co. are struggling under nearly $13 billion in uncollected power costs due to an inability to pass high wholesale power costs to customers under a rate freeze. Gov. Gray Davis Tuesday blasted the utilities for not having paid their QF bills in full since December. Pacific Gas & Electric Co. has made some partial payments to QFs, but SoCal Edison has paid nothing. Together, they owe the QFs about $1 billion, but the order doesn't address that debt. An Edison executive said, in reaction to the governor's sharp comments, that the company simply doesn't have the money to pay creditors. "The root problem here is there just isn't enough money in the current rate base to pay our bills," said Edison Senior Vice President of Public Affairs Bob Foster. "We understand the financial distress (the QFs) face; we are facing financial distress ourselves." The proposed PUC order would also require the state's investor-owned utilities to offer the small generators five- and 10-year contracts for power for $79/MWh and $69/MWh, respectively. The QFs "may be able to live with" the PUC proposal, but the five- and 10-year contract prices may be inadequate if natural gas prices at one of the California borders are high, said Jan Smutny-Jones, president of the Independent Energy Producers Association. Natural gas prices into California are currently higher than anywhere in the country. But some say the proposed decision may not be enough to prevent the QFs from filing involuntary bankruptcy proceedings against the utilities for the money they are still owed. "There's still a lot of skepticism. To say our position has changed based on the CPUC decision or the governor's announcement is not accurate. A lot still has to happen," said Jay Lawrence, a spokesman for a renewable creditors committee. -By Jessica Berthold, Dow Jones Newswires; 323-658-3872; jessica.berthold@dowjones.com -0- 22/03/01 01-27G State Says It's Accelerating Plan to Buy Power Utilities' Grid Government: Talks with Edison are reported near completion, but agreement with heavily indebted PG&E has a way to go. RONE TEMPEST; DAN MORAIN TIMES STAFF WRITERS 03/21/2001 Los Angeles Times Home Edition A-22 Copyright 2001 / The Times Mirror Company SACRAMENTO -- As blackouts hit California for a second day Tuesday, a key consultant to Gov. Gray Davis said negotiations to buy the power grid owned by the state's largest utilities "are proceeding at an accelerated pace." Wall Street consultant Joseph Fichera said talks with Southern California Edison could be wrapped up within days, although those with PG&E are much less advanced. The administration and PG&E have not reached even an agreement in principle, he said. PG&E, which has more debt than Edison, says its transmission lines are more extensive than those of its Southern California counterpart. The state wants to buy the utilities' transmission lines and other assets for about $7 billion to provide cash to the utilities, help stabilize the electricity supply and ease the power crunch that has plagued California for months. To research the grid purchase, Fichera said, the state has had to pore over 80,000 documents just to assess the utilities' liabilities. "We are working at a good pace," said Fichera, chief executive of the New York firm Saber Partners. " . . . If we get to a deal-breaker, it might be longer." By making Fichera, who is also a consultant to the Texas Public Utilities Commission, available to reporters Tuesday, the Davis administration was clearly trying to reassure the public that progress is being made on the governor's plan to pull the state out of the crisis. Since mid-January, when the big utilities' credit failed and suppliers stopped selling to them, the state has spent nearly $3 billion buying electricity from a handful of large suppliers in Texas, Oklahoma, Georgia and North Carolina. Not a cent has gone to the hundreds of alternative energy suppliers in California who provide about a quarter of the state's electricity. The Monday and Tuesday blackouts occurred partly because many of the cash-strapped alternative suppliers, including solar, biomass and wind power units, cut their normal supply to the system in half. They say Edison and PG&E have not paid them since November; the utilities say they are out of cash. Assemblyman Fred Keeley (D-Boulder Creek) said the plight of the alternative suppliers has dragged on because of the complexity of dealing with "almost 700 individual contractors." Another delaying factor, said Keeley, who with state Sen. Jim Battin (R-La Quinta) worked for almost three months to come up with a legislative plan to lower the small producers' prices, was "the huge enmity . . . manifested between the utilities and the qualifying facilities. These people just don't like each other." This week's blackouts provided two painful lessons for the Davis administration: * When it comes to electricity, size doesn't matter--every kilowatt counts. During peak use, a small wind power facility in Riverside County can make the difference between full power and blackouts. * There is no such thing as a partial solution. Unless the whole energy equation is balanced, the parts don't work. For the Davis plan to work, several key elements need to come together or utility customers will almost certainly face rate increases above the 19% already set in motion * The cost of power purchased by the state must be reduced through long-term contracts with the big out-of-state producers. These contracts, the details of which the Davis administration has kept confidential, are still being negotiated by Davis consultant Vikram Budhraja of the Pasadena firm Electric Power Group. The administration says it has concluded 40 contracts with generators, about half of which have been signed. According to the most recent statistics released by the Department of Water Resources, which buys power for the state, current prices are still well above the rate state Treasurer Phil Angelides says is necessary for a planned $10-billion bond offering to succeed. The bonds, set for sale in May, will be used to reimburse the state for the money it will have spent by that time to buy electricity. The state is currently spending at a rate of $58 million a day to buy power. If prices stay high, the $10 billion in bonds will not cover the state's power purchases by the end of the summer. Angelides says he cannot proceed with bridge financing for the bonds until the Public Utilities Commission devises a formula to guarantee that a portion of utility bills will be dedicated to bond repayment. Angelides has estimated that, under the January law that put the state in the power buying business, the state must be reimbursed $2.5 billion annually, and that $1.3 billion is needed to service the debt. PUC Administrative Law Judge Joseph R. DeUlloa is expected to announce his ruling on the reimbursement rate later this week, leading to a PUC vote on the matter as early as next week. * The rates charged for electricity by the alternative producers, known as qualifying facilities, must be cut at least in half, down from an average of more than 17 cents per kilowatt-hour. In his news conference Tuesday, Davis said he will ask the PUC to set QF rates at 6.9 cents for 10-year contracts and 7.5 cents for five-year contracts. Meanwhile, PUC Chairman Loretta Lynch, a Davis appointee, said Tuesday that the commission will vote next week on a proposed order requiring Southern California Edison and Pacific Gas & Electric to pay the QFs for electricity in the future. Lynch said a recent PUC assessment showed that the utilities have enough cash on hand for that. "We are trying to make sure the folks providing the power get paid," Lynch said. "The qualified facilities have demonstrated that they haven't been paid and that it is impairing their ability to provide power." The utilities contend that if they pay the small providers what they owe them, there will not be enough money left to pay other creditors. "There is not enough money in the current rate structure to pay the [alternative producers], pay the [Department of Water Resources] and pay the utilities for their generation," said John Nelson, a spokesman for PG&E. * The utilities must sell to the state the power they produce themselves, mainly from hydro and nuclear sources, at a rate only slightly above the cost of producing it. This is tied to the ongoing negotiations between the Davis administration and the utilities to restore the near-bankrupt utilities to solvency. * Times staff writers Julie Tamaki, Miguel Bustillo and Tim Reiterman contributed to this report. Davis OKs Subsidy of Pollution Fees Smog: As part of secret deal to get long-term energy contracts, state would pay for some of the credits that allow excess power plant emissions. Critics renew call for full disclosure. DAN MORAIN TIMES STAFF WRITER 03/21/2001 Los Angeles Times Home Edition A-23 Copyright 2001 / The Times Mirror Company SACRAMENTO -- As part of his closed-door negotiations to buy electricity, Gov. Gray Davis has agreed to relieve some generators from having to pay potentially millions of dollars in fees for emitting pollutants into the air, Davis said Tuesday. Davis announced two weeks ago that his negotiators had reached deals with 20 generators to supply $43 billion worth of power during the next 10 years. However, the Democratic governor has refused to release any of the contracts or detail various terms, contending that release of such information would hamper the state's ability to negotiate deals with other generators and therefore ultimately would raise prices Californians pay for electricity. Sources familiar with the negotiations, speaking on condition of anonymity, said the agreement reached with Dynegy Inc., a power company based in Houston, is one that includes language requiring that the state pay the cost of credits that allow emissions. Dynegy spokesman Steve Stengel declined to discuss the company's deal with the state. "We couldn't get them to sign contracts; it was a sticking point," Davis said of the decision to pay the fees of some generators. "We had to lock down some power so we were not totally dependent on the spot market." The fees in question are part of an emission trading system known as RECLAIM. Under the system, companies are allotted a certain amount of allowable pollution. If their operations pollute more, companies are required to purchase credits on an open market. Currently the credits cost about $45 per pound of pollution--an amount that can lead to a bill of well over $10 million a year for a power plant. The South Coast Air Quality Management District, which regulates pollution in the Los Angeles Basin, is considering steps to significantly lower the cost of the system--a step that could considerably cut the state's potential cost, Davis said. Senate Energy Committee Chairwoman Debra Bowen (D-Marina del Rey) defended the decision to cover the power company's costs. "It is a question of whether it brings down the price of power," she said. "If it brings down the price of power, I don't have a problem with it." Nevertheless, word that the contracts could bind the state to pay pollution fees caused some critics of Davis' policy to renew calls for Davis to reconsider the secrecy surrounding the power negotiations. The payment provision underscores the fact that the contracts involve more than merely the prices the state will pay for its megawatts, the critics note. "The Legislature should have known about it," said Senate President Pro Tem John Burton (D-San Francisco). "It is going to cost taxpayers money. It makes you wonder. . . . This was a policy issue that was never discussed with the Legislature." V. John White, a lobbyist for the Sierra Club, who also represents alternative energy producers, called the contract proposal "a horrible precedent." "Until we know exactly what the state has agreed to and how much of a subsidy this represents, we can't determine how serious the breach of principle this is," White said. Another critic of the secrecy of the negotiations, Terry Francke, general counsel for the California First Amendment Coalition, said the provision in question "raises the possibility that there are other [concessions]" that have not yet come to light. In the summer, when demand for power is highest, some generators probably will exceed pollution limits set by regional air quality management districts. To avert blackouts, state officials might ask the companies to keep plants running. In such cases, some sources familiar with aspects of the contracts said, the contract language could be interpreted to suggest that the state would cover any fines--although Davis said Tuesday the state will not cover the cost of fines. A recent Dynegy filing with the Securities and Exchange Commission underscores the rising cost of pollution-related measures. The company, which is partners with NRG Energy in three California plants in El Segundo, Long Beach and Carlsbad in San Diego County, said its "aggregate expenditures for compliance with laws related to the regulation of discharge of materials into the environment" rose to $14.3 million in 2000, from $3.6 million in 1999. A South Coast Air Quality Management spokesman said Dynegy's facilities appear to be fairly clean--although Sierra Club lobbyist White said Dynegy has been seeking a permit at one of its plants to burn fuel oil, which is dirtier than natural gas. Davis said he intends to "make this information public," but he added that "we do not want to put the public's interest in jeopardy by asking them to pay higher prices." "Nobody likes the notion that [the administration is] not being fully forthcoming," Davis said. "But I also have a corollary responsibility that I don't stick these generators with a higher rate." FERC ORDERS WILLIAMS ENERGY AND AES TO EXPLAIN THEIR REFUSAL TO MAKE CERTAIN RMR UNITS AVAILABLE TO CALIFORNIA ISO LAST YEAR 03/21/2001 Foster Electric Report 5 (c) Copyright 2001, Foster Associates, Inc. Following a preliminary, non-public investigation, FERC directed AES Southland Inc. and Williams Energy Marketing & Trading Co. (IN01-3) on March 14 to show cause why they did not violate section 205 of the Federal Power Act (FPA) by failing to provide power to the California ISO from two reliability must-run (RMR) generator units during a period in April and May 2000. The investigation responded to a matter referred by the Cal-ISO. If a violation is found, Williams Energy and AES could be required to refund excess profits of $10.9 million (as calculated by FERC) and face restrictions on their market-based rate authority for a year. The show cause order involves two generation units (Alamitos 4 and Huntington Beach 2), owned and operated by AES. Williams Energy markets all output from the Alamitos and Huntington Beach plants, including the two units at issue here, pursuant to a tolling agreement filed with the Commission. The Cal-ISO designated the two units as RMR units that it could call on when necessary to provide energy and ancillary service essential to the reliability of the California transmission network. The Cal-ISO makes both a fixed payment to the RMR owner or operator to compensate for the RMR unit's availability and a variable payment for the RMR unit's output (if the unit is not otherwise participating in the market). Williams Energy and the Cal-ISO executed RMR agreements, filed as rate schedules with the Commission, allowing the Cal-ISO to dispatch units "solely for purposes of meeting local reliability needs or managing intra-zonal congestion." The ISO may dispatch a non-RMR unit if the designated RMR unit is not available. Under its RMR agreement with the ISO, Williams is paid the greater of its contract price or marginal cost for operating RMR units. However, if a non-RMR unit has to be dispatched because a designated RMR unit is unavailable, Williams will be paid its bid price, not the RMR contract price. During the April to May 2000 period, the Cal-ISO sought to dispatch both Alamitos 4 and Huntington Beach 2 as RMR units to provide voltage support. However, according to the FERC order, Williams Energy refused to make Alamitos 4 available from April 25 through May 5, and to make Huntington Beach 2 available from May 6 through May 11, "for reasons not directly related to the necessary and timely maintenance of the units." Consequently, the Cal-ISO was forced to dispatch non-RMR units at a higher cost, namely, Williams Energy's bid price for service provided by the replacement units. By contrast, if the RMR units had not experienced outages and been available from April 25 through May 11, Williams Energy would have received either (1) the market revenues only from the respective units, which would have resulted in no payments for RMR output from the ISO to Williams Energy, or (2) Williams Energy's variable cost for operating the RMR units less the market revenues from the respective units' output. Accordingly, FERC observed, Williams Energy had "a financial incentive to prolong any outages of Alamitos 4 and Huntington Beach 2 in April and May 2000." The bid price for the non-RMR units was at or near the Cal-ISO's then-effective bid cap of $750/MWh, FERC continued. Therefore, Williams Energy received payments from the Cal-ISO of more than $11.3 million, or about $10.3 million greater than the estimated average variable operating cost of the non-RMR units (approximately $63/MWh) during the period in question. This indicates a refund amount, including interest, of nearly $10.9 million. The information in this order and a non-public appendix, the Commission declared, suggests that AES declared outages at the two RMR units and maintained Huntington Beach 2 in a manner inconsistent with good utility practice, and that Williams Energy took action to extend the outage at Alamitos 4 and to make Huntington Beach 2 unavailable for "pretextual reasons." Based on this information coupled with Williams Energy's financial incentive not to make the Alamitos 4 and Huntington Beach 2 units available, FERC found serious questions about whether (1) AES and Williams Energy violated applicable RMR contracts and tariffs on file with the Commission pursuant to FPA section 205 when they refused to make Alamitos 4 and Huntington Beach 2 available for dispatch by the Cal-ISO; (2) whether Williams acted inconsistently with its market-based rate authority and the market monitoring information protocols of the Cal-ISO's tariff regarding the unavailability of the RMR units during the period at issue; and (3) whether AES violated a tolling agreement on file with the Commission pursuant to section 205. The Commission identified two remedies for these potential violations: a refund by Williams Energy and/or AES of revenues received greater than the amount that would have collected from the ISO if the RMR units had been available, and a condition on Williams Energy's market-based rate authority. Specifically, for a one-year period, if an RMR unit were not available when dispatched by the Cal-ISO, a non-RMR unit dispatched in its place would only receive payment according to the terms of the applicable RMR contract. In other words, Williams Energy would not receive the bid price for operation of the substitute, non- RMR unit. The Commission directed Williams Energy and AES to show cause, within 20 days, why they should not be found to have committed the above-described violations and why the specified remedies should not be imposed. Further, to ensure procurement of all relevant information, the Commission instituted a formal, non-public investigation into the operation, maintenance and sales of power from the Alamitos and Huntington Beach plants in 2000 and 2001. Calif Consumers Failing To Conserve Pwr Despite Blackouts 03/20/2001 Dow Jones Energy Service (Copyright (c) 2001, Dow Jones & Company, Inc.) LOS ANGELES -(Dow Jones)- California consumers haven't been conserving enough electricity to relieve strain on the power grid and reduce demand in the state, a spokesman with the Independent System Operator said Tuesday. The ISO said that despite two straight days of statewide rolling blackouts, consumers aren't using less electricity, which means additional megawatts will be taken off the grid. As a result, blackouts could last longer and impact additional communities, the ISO said. ISO spokesman Pat Dorinson said Monday "conservation in California is no longer an option," but consumers in the state aren't heeding the call to reduce consumption. Conservation efforts during rolling blackouts Monday and Tuesday were far less than Jan. 17 and Jan. 18, when blackouts swept through Northern California due to transmission constraints. Jim Detmers, the ISO's vice president of operation, said consumers saved the state about 1,000 megawatts of electricity, enough power for 1 million houses. The ISO said conservation efforts Monday were about 500 MW or less. "We would be very happy if we saw the same amount this time," Detmers said. The state's Energy Commission said consumers think it's no longer important to save electricity until blackouts are imposed. "People have been saving generally, but it isn't a big bump from hour to hour," a spokesman for the Energy Commission said. Gov. Gray Davis launched a massive conservation campaign this month, promising consumers a rebate on their summer electricity bill if they save at least 20% of electricity, compared with last summer. The governor said he believes conservation this summer will amount to possibly saving 5,000 MW and averting the chance of rolling blackouts. -By Jason Leopold; Dow Jones Newswires; 323-658-3874; jason.leopold@dowjones.com Gas Co.'s Success Opens Debate Southern California energy supplier has reaped millions of dollars in state incentives for keeping down its costs. Though consumers get a share of the windfall, regulators are asking whether they should get more of the bonus, which is expected to be huge this year, as a form of price relief. The natural gas provider says it deserves to keep its reward. TIM REITERMAN TIMES STAFF WRITER 03/18/2001 Los Angeles Times Home Edition C-1 Copyright 2001 / The Times Mirror Company SAN FRANCISCO -- While consumers suffer soaring energy bills and the big electric utilities lurch toward insolvency, the news is not all dire at Southern California Gas Co. Through vigorous deal making, the Sempra Energy subsidiary has consistently beaten the volatile natural gas market during the last year, and the company stands to reap millions of dollars in savings through a state incentive program that rewards utilities for keeping costs down. For several years, the utility has been splitting the savings 50-50 with ratepayers whenever the company's gas costs fall slightly below market levels. Those savings, Gas Co. executives acknowledged, have shot to unprecedented heights during the state's power crisis. Now, in this climate of high consumer gas bills and runaway market prices, regulators are taking another look at the program. The question before the Public Utilities Commission: Should Gas Co. ratepayers, who endured huge bill increases this winter, get a bigger share of the savings? The total windfall under the incentive program has in some years exceeded $20 million. But the amount for the last 12 months is expected to multiply many times over, company executives said, partly because the Gas Co. has done so well in the wild market by selling, lending and trading gas as well as buying it. "The recent market conditions . . . could possibly result in some unintended consequences that result in shared savings of benefits that may be more appropriately allocated entirely to ratepayers," the PUC's consumer protection arm, the Office of Ratepayer Advocates, reported Oct. 30, even before the latest upward market spirals. Gas Co. representatives express frustration, saying they have done what the state has requested under its gas-cost incentive program: Buy smarter, and pass the savings along to its 5 million residential and small-business customers. The company contends it has worked hard to keep bills down and should be rewarded for taking risks to obtain gas at the lowest possible cost. "The PUC, every time we do well, raises the bar on us," said Jim Harrigan, director of gas acquisition. "I don't necessarily agree with it." By virtue of its purchasing power and storage and pipeline capacity, the Gas Co. has become a big player in the regional natural gas market. In the company's bustling trading room at its Los Angeles headquarters, 15 employees track price movements, pipeline supplies and even the weather via computer, while cutting deals and arranging gas shipments. Although the Gas Co. buys the commodity for its customers, the company also sells to marketers, other utilities and producers. State officials say the number of transactions by the company has risen steeply to 10,000 to 20,000 a year, including gas sales along California's border, where prices have rocketed. The PUC created the cost incentive program for the state's three major gas utilities--San Diego Gas & Electric Co. in 1993, Southern California Gas the next year and PG&E Corp.'s Pacific Gas & Electric Co. in 1997. Like Southern California Gas, SDG&E is a subsidiary of Sempra Energy. The program was designed to give utilities added motivation for obtaining gas at the best price for customers. It replaced lengthy and contentious reviews by the PUC, which assessed whether utilities had purchased gas at reasonable prices and sometimes ordered them to return millions of dollars to customers. An annual audit of the Gas Co. program and a staff evaluation requested by the PUC recently concluded that the program has achieved many of its goals, but it also proposed adjustments that would give customers a greater share of the rewards. "These incentives were designed in less volatile times," said program supervisor Mark Pocta of the Office of Ratepayer Advocates, which conducted the audit. "There is a question of how much should go to ratepayers and shareholders." His office also plans to assess whether the Gas Co.'s trading had any negative effects on the gas market, resulting in diminished supplies or higher prices for other utilities and their customers. Under the program, the Gas Co. shares risks and rewards with its ratepayers, but since the program was launched, it has consistently produced awards. If the cost of gas is 0.5% or more below a benchmark based on monthly gas market indexes, the company and its customers split the savings 50-50. California's gas utilities are not allowed to profit on their raw commodity costs; they merely pass along those costs to ratepayers with no markup. The savings under the incentive program are automatically reflected in consumers' monthly gas bills but are not itemized. At the end of the year, the utilities request their share of the savings, and the PUC has routinely granted approval. Then the companies, and thus their shareholders, are paid through customer utility bills. The resulting bill increases typically have been modest, less than 1%. But as the awards increase, regulators say, the effect on customers will become more significant unless the present structure is changed. "There's no question, when you start to talk about $100 million [or more in savings], and add [the company's award] into rates in a year, it will make a noticeable difference," said Los Angeles economist Jeff Leitzinger, president of Econ One, who has done consulting for the Gas Co. Still, he said, ratepayers should bear in mind that they already benefit from below-market gas and transportation costs. In the early years of the program, records show, the Gas Co.'s awards went from zero to $3.2 million, $10.6 million, $2 million and $7.7 million. Last year's award of $9.8 million is awaiting PUC approval. This year's proposed award, covering the period through the end of this month, has not yet been submitted by the Gas Co. But the utility has provided monthly figures and oral updates on a confidential basis to PUC officials, who declined to provide figures. Harrigan of the Gas Co. said the savings are expected to multiply "many times over," largely because the company was well-equipped for the market fluctuations and tried to insulate its customers from high gas prices. "Any trading company, especially one with assets like we have, has benefited from volatility in the market," he said. Harrigan said, however, that he does not believe the company's level of activity has adversely affected the market and that its trading pales in volume to that of unregulated energy companies. Anne Smith, the Gas Co.'s vice president of customer service and marketing, said the utility will not release figures for this year's incentive program until they are filed with the PUC in June. "I don't want to interrupt that process," Smith said, noting that the PUC ultimately will determine the company's award. "I think they need to focus on what [the Gas Co.] has done for the ratepayers. It has been immense." Although the typical monthly gas bill has risen to $80 from $50 a year ago, Gas Co. customers tend to have lower rates than those of other California utilities. The company's gas procurement cost in February was 66 cents per therm, or 100 cubic feet. That's more than twice last year's cost but only about half what sister company SDG&E paid for its 740,000 customers in February. It's also much lower than the $1.09 per therm PG&E pays. "We were as upset about the overall [gas price] increase as anyone else," Harrigan said. "I would rather see the prices of a year ago, even though we managed to do a little better in the [recent] environment." When it comes to keeping down costs, regulators say, the Gas Co. has advantages over other utilities in the marketplace. For one, the company has so much pipeline capacity at major gas basins that it purchases a relatively small portion of its needs--about 10% to 15%--at the California border, where prices in December briefly rose to the equivalent of $6 per therm, or 20 times those a year earlier. This presents opportunities. "At the beginning of the month, they forecast a certain amount of gas they have to buy," said Pocta of the Office of Ratepayer Advocates. "If they go out and buy and do not need to use as much because the weather is more moderate than expected, they can either inject the gas into storage or they can make sales at the border." With gas price run-ups like those seen in the last year, Pocta said, "there is a question: Should that benefit be shared, or flow entirely to ratepayers?" Customers, he pointed out, may be entitled to additional benefits because they pay for the interstate and intrastate pipeline capacity and the gas storage that give the company the flexibility to make advantageous deals. "By the same token, we want [the Gas Co.] . . . to go into the market and generate cost savings that can be passed on to the customers," he added. "We want them to have incentives. The question is how to balance them." Under deregulation, the Gas Co. adopted the nontraditional role of marketer, according to a PUC Energy Division report in January. The company makes gas sales at various locations. It engages in exchanges. It makes futures transactions to help stabilize costs. "They look for ways to lower the gas cost," said Richard Myers, program supervisor at the Energy Division. "Before they were lots more risk-averse. Now they feel they can take risks and make money for shareholders, and it is a benefit for ratepayers at the same time." The incentive programs are tailored to individual utilities, so it is difficult to compare them. Records show that the shared savings at SDG&E, a much smaller utility, declined steadily from $9.2 million in the 1996-97 cycle to $560,000 in 1999-2000. Spokesman Ed Van Herik said the falloff largely represents a drop in gas purchases, especially as the company sold off its own gas-fired electricity-generating plants. He said the company does not yet know how much savings have accrued in the last year. In an annual report to the PUC in February, PG&E said it had no savings under the incentive program and thus it is not entitled to any award for the 1999-2000 cycle. The Utility Reform Network, a San Francisco-based consumer advocacy group, said it will closely watch the PUC's evaluation of the incentive program at the Gas Co. "We want to make sure, given the dramatic changes in the gas market and prices, ratepayers are not left out of the [additional] benefits," TURN attorney Marcel Hawiger said. "We'll look to see whether the mechanism should be changed." Severin Borenstein, director of the Energy Institute at UC Berkeley, said the program should be changed to provide more incentive for utilities to enter long-term contracts that would smooth out volatility in the market. "Unfortunately, under the system," he said, "the only incentive is to beat the [spot] market." Use this file to download and print all the articles in this section (See attached file: Dow Jones Interactive-california-03233001-selected.doc) IMPLICATIONS FOR OTHER MARKETS (For easier printing of all the articles in this section use the file at the end of the section) New York: New York at the crossroads Wednesday, March 21, 2001 Energy Insight (Embedded image moved to file: pic24389.pcx) By Dave Todd dtodd@ftenergy.com U.S. Energy Secretary Spencer Abraham declared this week that the Big Apple is on the verge of being bitten hard by power cuts and rising energy prices. Delivering the keynote address at the U.S. Chamber of Commerce's national energy summit in Washington Monday, Abraham said, "California is not the only state facing a mismatch between supply and demand," what with "electricity shortages predicted for New York City and Long Island this summer" and low capacity margins threatening electricity reliability elsewhere across the country. But how likely is it that New Yorkers will face blackouts of the sort confronting Californians? Not very, says energy trade specialist Edward Krapels, managing director of Boston-based METIS Trading Advisors. Krapels, a consultant helping major Northeastern utilities, such as Consolidated Edison, design market-hedging programs, adamantly decried what he said are facile comparisons between conditions in New York and California, there being "more differences than there are similarities" between those two industrial cornerstones of the country's economy in respect to energy security management. "First of all, New York has a more varied portfolio of energy generation sources than California," he said. California has hydro, nuclear and gas, but when it lost a lot of hydro, the state needed gas to pick up the slack, and the "capacity just wasn't there." In New York's case, the state has oil and coal still in the mix and its overall dependence on gas is much lower than California's, Krapels added. New York avoids making same mistakes Portfolio diversity is one pillar of any effective plan to help New York avoid the same errors made in redesigning California's marketplace. New York's Independent System Operator (ISO), in a new report warning that the state is at an "energy crossroads" in terms of its capacity adequacy in the immediate future, argues that a concerted effort is required to arrest declining in-state generation capacity reserve margins, and a strategy must be put in place, whether or not new generation comes on-line, in accordance with current anticipated scenarios. A measure of New York's essential difficulty is that, between 1995 and 2000, statewide demand for electricity grew 2,700 MW, while generating capacity expanded by only 1,060 MW. With no major new generating plants in downstate New York fully approved, the gap is expected to continue to widen. To avoid "a replication of California's market meltdown" the New York ISO calculates the state's daily generating capacity needs to grow by 8,600 MW by 2005, with more than half of that located in New York City and on Long Island. Expressing concern this may be too big a burden for the current bureaucratic process to bear, the ISO wants to see a state-appointed ombudsman named to help would-be merchant power plant investors plow through red tape. "Increasing New York's generating capacity will also lessen the state's escalating and risky reliance on out-of-state sources of electricity," the ISO added. "Since 1999, New York State has been unable to cover its reserve requirements from in-state sources." Not everyone agrees with that analysis, insofar as it argues for circling the wagons inward. Some analysts believe the ultimate solution lies not in tying in more inwardly dedicated power, but in expanding the marketplace by breaking down inter-jurisdictional barriers. In any case, New York energy regulatory authorities and those responsible elsewhere in the U.S. Northeast, such as PJM (Pennsylvania-New Jersey-Maryland) Interconnection and the New England Power Pool, are in vastly better shape in terms of "cross-border" cooperation than California and its neighbors in that efforts are being made among various authorities toward developing an integrated regional electricity market. In California, by contrast, the state's focus?for example, in the case of new gas-fired power plant development?has been to ensure dedicated supply to the California market alone, rather than on a regional marketplace. (Embedded image moved to file: pic05075.pcx) The New York ISO's new broad-based analysis of market-restructuring needs argues that the relatively stronger health of its reformed environment is "due in large part to the ability of New York's utilities to enter into long-term power contracts." What needs to be done most, it says, is to move aggressively to build some of the more than 29,000 MW of "proposed new generation in the siting pipeline." In the meantime, the 30,200 MW of electricity New Yorkers used on a peak day last summer shouldn't be eclipsed on too many days this coming summer (given early long-range weather forecasts). Demand, however, is expected to increase at an annual average rate of up to 1.4%. So while New York City, the rest of the state and adjacent parts might breathe easy this year, it could be a brief rest from the fray. Meanwhile, a 4% shortfall is still being planned for this summer that is not yet provided for, as authorities hurriedly seek to arrange new generation plants around Manhattan, on Long Island and even on barges offshore. One way or another, whether it is the weather or the politics of siting new energy facilities, it's going to be a hot time in the city. Long-term solutions hit brick wall Meanwhile, attempts at longer-term solutions continue to run into trouble. Last week, Connecticut state regulators came out against a proposal to run a new underwater cable under Long Island Sound that Hydro-Quebec subsidiary TransEnergie U.S. Ltd. wants to build to pump more juice into Long Island Power Authority's load pocket. Despite strong promises from TransEnergie to be diligent in avoiding damage to oyster beds in Long Island Sound, the proposal failed to convince authorities, who were persuaded the pipeline project could lead to diversion of electricity from Connecticut. In similar fashion, private companies wanting to build 10 small independent power plants and temporary generators offshore New York City are running into intense opposition from environmental groups and citizen orga nizations?some of whom have taken their cases to the state assembly in Albany. The David vs. Goliath nature of such controversies has further alerted energy companies to the difficulties of addressing complex energy supply issues that may ultimately devolve to people not wanting things in their backyard, regardless of what the alternative might mean to their fellow citizens or the greater public good. But suddenly, in New York, California's troubles?while still distant in their intensity? may not be so far away. By some estimates, this summer's bills for Consolidated Edison customers could be up as much as one third or more over last year's charges. Letting the time slip when it comes to building new infrastructure isn't going to make the pain go away. NEW YORK: NY-ISO REPORT SAYS STATE NEEDS 4,000 - 5,000 MW OF NEW GENERATION SOON TO AVOID SEVERE SHORTAGES; NY-ISO ALSO ASKS FERC TO EXTEND BID CAP AND TEMPORARY EMERGENCY PROCEDURES 03/21/2001 Foster Electric Report 2 (c) Copyright 2001, Foster Associates, Inc. Raising the specter of an East Coast version of the California crisis, the New York Independent System Operator, Inc. (NY-ISO) is warning of serious electricity shortages, air quality deterioration and stunted economic growth without immediate approval of between 4,000-5,000 MW of new generating capacity in the state. Of this amount, 2,000-3,000 MW is needed to serve New York City. Another 8,600 MW of new capacity will have to be built by 2005, the NY-ISO said in a recent report, Power Alert: New York's Energy Crossroads. "New York is heading towards a very serious situation unless it acts immediately to get new supply sited within its borders," said NY-ISO president William Museler in a statement accompanying the report. "This report is essentially a caution light at New York's energy crossroads." Sources in the New York Public Service Commission have downplayed the NY-ISO's warning, asserting that a process for bringing on new generation is well underway, with more than 85 projects in the approval pipeline. In a related development, the NY-ISO asked FERC to approve a proposed tariff amendment (ER01-1517) extending existing bids caps in some of its markets until 10/31/02, and a separate and related amendment (ER01-1489) extending the NY-ISO's so-called temporary extraordinary procedures (TEP) that allow the ISO to make price adjustments and take other corrective actions if it finds evidence of market power abuse. The NY-ISO Report --The NY-ISO likened the situation in New York to that faced by California, where a relentless increase in demand has not been met with an equal increase in supply. The NY-ISO said that between 1995 and 2000, statewide demand for electricity rose by 2,700 MW, while generating capacity increased by only 1,060 MW. With no major new generating plants in downstate New York fully approved for construction at this time and generation demand in the state expected to grow around 1.3 percent annually for the next several years, the NY-ISO said this gap will continue to widen. The inevitable result of this trend is large rate increases for New York's power consumers. The NY-ISO's modeling suggests that "by 2005, statewide prices are likely to be more than 20-25 percent lower in the case in which new plants are built than in the case where they are not." In New York City, "the price to consumers of electric power could be reduced by as much as 28 percent when compared to the case of no new supply or load management programs." Besides large rate increases, the NY-ISO asserted that a failure to site and build new plants in New York will threaten power reliability in the state and lead to increasing reliance on out-of-state resources. The report said that if no new in-state generation comes on line in the next five years, the state's generation reserve margins will shrink from the current 14.9 percent above peak demand "to a dangerously low 8.4 percent by 2005." Pointing to California's situation, the report added that increased reliance on power imports "can subject electrical suppliers and customers in New York to transmission restrictions and political and economic considerations beyond the control or influence of responsible New York State entities." To avoid these harsh consequences, the NY-ISO said New York's new siting law, known as the Article X process, needs to be modified. Since the law was passed 18 months ago, the report noted that only two plants have been approved (both upstate) and neither has yet been built. The problem, according to the NY-ISO, is that the siting process "requires the cooperation of multiple state agencies." To expedite the process, the report suggested the "clear designation of a lead agency and the adoption of an `ombudsman program' to expedite and coordinate the work of the agencies responsible for the Article X process must be made." The NY-ISO added that an expedited approval process would improve the environment because older, more polluting power plants would be replaced by cleaner gas-fired units. On a more positive note, the NY-ISO reported that New York's restructured power market "is far healthier than that in California, due in large part to the ability of New York `s utilities to enter long-term power contracts. The basic structure of the New York market will also reduce unwarranted price spikes and other market disruptions through mitigation programs which automatically correct price spikes due to market power abuses." "Nevertheless, California `s experience raises a caution flag for all New Yorkers," the report continued. "The deregulated market in New York cannot achieve lower costs through competition without an increase in generating capacity similar in magnitude to the recommendations of this report, along with simultaneous efforts to institute greater conservation, better load management and alternative energy supply initiatives. Additionally, closer integration with regional suppliers of power is both inevitable and beneficial." The report also recommended (1) accelerating conservation, real-time metering and price-sensitive load programs; and (2) upgrading the state's and the Northeast's transmission infrastructure. The Proposed Tariff Amendments -- New York's Article X siting process and continuing tight supplies were also cited in the NY-ISO's request to extend from 4/30/01 until 10/31/02 its $1,000/MWh bid caps. FERC first approved the 1,000/MWh bid caps in July 2000 (see REPORT No.197, pg.6), and subsequently extended them. The NY-ISO's board "is sensitive to the Commission's concerns about undue intervention in energy markets," the filing related. "Nevertheless, the NY-ISO is submitting this request because it believes that delays in New York state's `Article X' process for licensing and siting new generating capacity is inhibiting supply from increasing to match continued demand growth. . . . Moreover, although the NY-ISO proposes to implement several demand-side measures this summer, it is not yet clear whether they will make demand sufficiently price-responsive to avoid periods of high prices that would not occur if there were an efficient demand-side response." Thus, the NY-ISO insisted that the requested extension is needed to provide more time for the development of additional generation and to gauge the effectiveness of the NY-ISO's proposed demand-side response mechanisms "in order to avoid exposing consumers to price spikes that are not a product of the interplay of competitive market forces." Other problems cited in the NY-ISO's filing which keep New York's power market from being fully competitive include continuing capacity and operating constraints at the state's Central-East interface, and questions over adequate gas supply. "The NY-ISO remains acutely aware that taking steps to deal with price abnormalities can have undesirable consequences," the filing continued. "Nevertheless, the NY-ISO believes that the $1,000/MWh cap that has been used in the PJM's markets since inception does not appear to have had an adverse impact there. . . . The permanent bid caps in PJM, and the interim bid caps in ISO New England (proposed for extension through the end of 2001) also make continuation of the NY-ISO's bid caps more important in order to maintain uniformity across the Northeastern markets. The NY-ISO also continues to believe that suppliers will not be materially harmed by the continuation of bid caps, which are likely to come into effect very rarely and are set at levels that prevent only artificially high run-ups in prices." The NY-ISO's request to extend its TEP procedures (which also were previously extended) through 10/31/02 cited similar problems with New York's power markets, but claimed that the NY-ISO "has made great strides" toward eliminating market design and software flaws. "The TEPs were, and remain, an indispensable tool for responding to and correcting market flaws and other instances where the markets are not operating as the NY-ISO and the Commission intended," the filing insisted. MASSACHUSETTS: Attorney general says summer poses electricity concerns By JOHN McELHENNY Associated Press Writer 03/19/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. BOSTON (AP) - The state's top consumer advocate warned that Massachusetts may see "California-type" electricity blackouts this summer when temperatures rise and residents turn on air conditioners and fans. "It would be a mistake to feel this is a cold weather problem," said Attorney General Thomas Reilly in an interview with The Associated Press. "Our major problem will come this summer." State deregulation of the electric industry has been among the factors blamed for local power outages in California, and on Monday, California for the first time suffered rolling blackouts across the entire state. Massachusetts relaxed regulations on its own electric industry in 1998 to attract more companies to stir competition. But that hasn't happened yet, largely because the current high cost of oil and gas make it expensive to produce electricity. "The promise of deregulation was that there was going to be competition," said Reilly, a Democrat. "That competition in the wholesale market is not happening." Hot summer weather drives up electricity use as residents turn on air conditioners and fans, and Reilly said a few particularly hot days could strain the grid that provides the region's power. A spokeswoman for the region's power grid said electricity use is expected to rise 1.5 to 2 percent this year, but the region should have enough power because of six new power plants that have begun generating electricity in the past 18 months. "The situation is unlike California because we have new generation coming on line that is outpacing demand," said Ellen Foley, spokeswoman for ISO New England Inc., which manages the grid of 330 generators connected by 8,000 miles of high voltage transmission lines. Still, a particularly hot day and an unforeseen power generation breakdown could prompt ISO to ask residents to conserve electricity, a situation that arose once last summer, Foley said. In order to avoid any power outages and protect consumers, Reilly repeated calls for electric companies to build more power lines and to offer more options for new customers who have signed up since deregulation. Those customers typically pay more than long-term customers. Electric transmission companies should also be allowed to enter into two-year contracts with suppliers, instead of the six-month contracts many have now, to avoid short-term price spikes for consumers, Reilly said. The Attorney General's Office acts as an advocate for consumers. Michael Monahan, a spokesman for NSTAR, which provides electricity to more than 1 million customers, is upgrading some of its power lines and last year built a new line to Cape Cod, but currently has no lines under construction. "I wholeheartedly concur with the attorney general that it's something we have to focus on," Monahan said, but he added, "The indications I see are that we have an ample supply of electricity." California's statewide outages were ordered on Monday after a transformer fire, high demand and a lack of electricity imports pushed power reserves to near zero. California partially deregulated its electric industry in 1996, two years before Massachusetts. --- On the Net: Attorney General's Office: http://www.ago.state.ma.us NSTAR: http://www.nstaronline.com ISO New England Inc.: http://www.iso-ne.com NEVADA: Discussion of bill stopping power plant sales to continue Wednesday By JOHN WILKERSON Associated Press Writer 03/19/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. CARSON CITY, Nev. (AP) - Lawmakers hit more delays Monday in trying to pass a measure that pulls the plug on the sale of Nevada power plants to avoid California-style energy problems. "The goal of this bill is only stopping the divestiture of power plants and making sure it's constitutional," said Senate Commerce and Labor Chairman Randolph Townsend, R-Reno. "And that's not as easy as it sounds." Townsend's comment just before his committee began working on SB253 was prophetic - witnesses kept bringing up the need for more flexibility in the measure. Translation: Don't kill all deals by stopping Reno-based Sierra Pacific Power and Las Vegas-based Nevada Power from selling their Nevada power plants until June 2003 - and possibly until 2006. Pete Ernaut, a lobbyist for Reliant Energy which has been trying to buy a power plant, said unforeseen market changes could make a plant sale before 2003 a deal that would be in the public's interest. "If you put a two-year moratorium on these plants, all these deals are going to go away," he said. "When the cow leaves the barn, it's difficult to catch." Townsend had hoped to wrap up committee work on SB253 on Monday. Now it's up for review again Wednesday in the Commerce and Labor Committee. Reliant isn't the only company trying to keep power plant purchases alive. Earlier this month, executives of Pinnacle West Energy told the committee that it's in the public's interest to allow Sierra Pacific Resources to sell its Harry Allen power plant. The Harry Allen plant produces about 72 megawatts out of the 2,900 megawatts of energy that Nevada utilities generate. Pinnacle has plans to expand that to 700 megawatts by 2004. Other provisions not strictly related to the plant divestitures, such as ways in which Sierra Pacific and Nevada Power can recover the cost of undoing the sales contracts, don't have to be included in SB253, Townsend said. Townsend said the other concerns dealing with the energy crisis and utility deregulation can be handled in later bills - but the power plant sale issue must be handled now. Nevada's PUC and the Federal Energy Regulatory Commission had directed Sierra Pacific and Nevada Power to sell the plants as a condition of the companies' merger in 1999 under the parent company Sierra Pacific Resources. Critics of the plant sales say the plants generate about half the state's electricity - and if they're sold, the unregulated new owners could sell the power to other states and put Nevada into the energy dilemma California faces of shrinking supply and rising prices. The Southern Nevada Water Authority has presented an analysis stating that rate payers will save from $1.7 billion to $3.5 billion by July 2001 if the power plant sales are stopped. Nevada's Consumer Advocate's Office previously had projected a conservative estimate of $915 million in savings. MAINE: Panel of experts would review impact of energy deregulation By GLENN ADAMS Associated Press Writer 03/19/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. AUGUSTA, Maine (AP) - In the wake of rolling blackouts in California and rate spikes in their home state, Maine's top legislators proposed a study Monday into the effects of deregulation of the energy industry. "Deregulation of electricity is a new idea and we still have a lot to learn," Senate President Michael Michaud said as he called for the analysis. A panel of industry insiders, elected officials and consumers would study issues such as what standard rate consumers can expect and the likelihood of energy shortfalls over the next three years, and whether Maine consumers are vulnerable to anti-competitive activities. In addition, the Blue Ribbon Commission would look into whether changes in Maine's deregulation law are needed to encourage more generating capacity, improve conservation and spur competition. The study is being proposed as consumers remain mindful of a power crisis in California that resulted from high wholesale energy costs, a consumer rate cap and too few power plants in that deregulated state. Maine's deregulation law is designed to avoid such pitfalls, said Rep. William Savage, D-Buxton, House chairman of the Legislature's Utilities Committee. Maine's law does not cap consumer prices, as California's does, and the state has more than enough generating facilities to meet the state's energy needs, Savage said. Since Maine's deregulation law took effect in March 2000, Bangor Hydro-Electric Co. rates have increased 19 percent. The Public Utilities Commission approved a residential standard rate increase as recently as last month. Federal energy regulators are reviewing their decision to allow steep fee increases for utilities and power wholesalers that fail to arrange enough capacity to meet customers' peak load. Gov. Angus King and all four members of Maine's congressional delegation oppose the hike. The PUC has approved standard rate increases for energy delivered by Central Maine Power Co. to medium-sized and large industrial users. On the other hand, some towns and school districts are saving money on energy through deals they can get in the deregulated market. In the meantime, legislation has been introduced in response to some of the changes that have occurred in Maine's deregulated energy industry. One would use some of the money from the sale of power-generating assets to offset an increase in rates paid by large industrial users, said Sen. Norman Ferguson, R-Hanover, Senate chairman of the Utilities Committee. Supporters of the utility study that was proposed Monday said they are not looking to make changes in Maine's deregulation law, but if it needs fixing it could be done during next year's session. The lawmakers' primary interest is to find out how trends in a new environment designed to encourage competition will affect consumers, and to try to identify what consumers can expect in the few years ahead. House Speaker Michael Saxl, D-Portland, said the Legislature "has a fundamental public policy interest in making sure rate-payers and businesses are protected against exorbitant rate hikes." Michaud, D-East Millinocket, said he's interested in finding out how future changes in electric prices and availability might affect businesses and consumers in northern Maine. "The economy in my part of the state is the most vulnerable, and I want to make certain we are leaving no stone unturned in our effort to prevent any shocks to the economy in northern, western and eastern Maine," Michaud added. The commission would include House and Senate members from each party, a utility executive, and representatives of energy producers, providers, a large commercial consumer and individual consumers. OREGON: State Senate moves to combat energy crisis 03/16/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. SALEM, Ore. (AP) - In an attempt to avoid a California-like energy crisis, the Oregon Senate approved a bill Friday that would quicken the process of siting power plants that use gas and renewable resources. "It's important for Oregon. It makes sure that energy will be available to everyone," said Sen. Lee Beyer, D-Springfield. The measure, SB843, would shorten the siting process for power plants that use gas and renewable resources, like wind, from a year and a half to a matter of months. The speeded-up process would be in effect for two years. "If we can act now, we can actually start to solve power supply problems by this summer," said Sen. Jason Atkinson, R-Jacksonville California's strict regulations on the construction of new power plants has contributed to its current shortage and legislators took note. Beyer said though California was definitely a wake-up call, the measure is a reaction to the larger power picture in the Northwest. With low rainfall, hydroelectric generators will have trouble meeting demand, Beyer said. Gas-fired and wind plants could come online as soon as this fall and would provide relief. "We are not in a position to sit back and do nothing about the energy crisis the Northwest and the country are experiencing," said Senate Minority Leader Kate Brown, D-Portland. Conservationists, however, caution that lawmakers should be careful not to rush to provide power at the expense of environmental standards. WISCONSIN: Two utilities to add 975 megawatts in plan to avoid energy crisis By The Associated Press 03/22/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. Plans of two state utilities to add 975 megawatts to Wisconsin's electric power grid as a way of avoiding an energy crisis similar to California's were questioned Thursday by a consumer advocate who said too many power plants may be in the works. "Certainly nobody wants to see blackouts like you have in California but there is the danger Wisconsin could be overbuilding," said Steve Hiniker, executive director of the Citizens' Utility Board, which represents consumer interests in utility rate cases. He noted that plant construction costs ultimately are born by the utility customers. Alliant Energy Corp. announced its proposal Wednesday - in a filing with the state Public Service Commission - to spend $1 billion to build one coal and two gas-fired power plants. Alliant has proposed building a 500 megawatt coal-fired plant and a 100 megawatt natural-gas fired plant by 2006. It also wants to build a 200 megawatt natural gas-fired facility in 2011. Wisconsin has not built a coal-fired plant in more than two decades. Alliant has not determined the plants' locations. Also, Madison Gas & Electric, the state's smallest investor-owned utility, said Wednesday that it had signed deals to buy 175 megawatts of power from three generating plants in Wisconsin and Illinois. "Three out of the four past summers, we've had public appeals for conservation due to shortages somewhere in the state. We need to take steps to avoid that, and the California situation makes that even more clear," said Alliant spokesman Chris Schoenherr. "Getting more iron in the ground will give us more flexibility in the state to be able to react." Alliant acknowledged the new plants will probably mean rate increases, but it was too early to say how much rates would go up. California's problems, which this week resulted in the first deliberate blackouts since World War II, stemmed from underestimating the state's power needs, forcing utilities to sell their power plants but not allowing them to secure long-term supply contracts, and freezing rates, among other things. But Wisconsin's situation is far different. The state has moved slower than California toward deregulation, and there has been no desire here to speed up the process in recent years as power reliability became a problem. The PSC estimates that Wisconsin will need an additional 3,000 megawatts of power over the next decade. Hiniker said Wisconsin needs to coordinate its planning to avoid overbuilding. The costs of new power plants are passed on to ratepayers, meaning electric bills will increase as new generation is added. In addition, coal-generated power plants are a major source of air pollution in the state. "We don't have the advance planning that has kept Wisconsin from overbuilding in the past," said Hiniker. "This is something the PSC should be doing." MG&E's deals are: -A 10-year contract to buy 75 megawatts from Calpine Energy Services starting in May 2004. The power will come from the natural gas-fired plant Rock River Energy Center, near Beloit. Calpine Energy Services is a unit of San Jose, Calif.-based Calpine Energy Corp. The plant is being built by Northbrook, Ill.-based SkyGen Energy LLC, which Calpine bought last year from SkyGen President Michael Polsky and Wisvest Corp., a unit of Wisconsin Energy Corp. -A 10-year contract to buy 50 megawatts of power from the Rainy River Energy Corp. starting in May 2002. The power is coming from a natural gas-fired plant near Joliet, Ill. owned by LS Power Co. Rainy River is a unit of Duluth-based Minnesota Power Inc. -A five-year contract to buy 50 megawatts from an El Paso Merchant Energy plant near Cordova, Ill., in western Illinois. The owner of the natural gas facility is the Cordova Energy Center Co., which is a unit of Iowa-based MidAmerican Energy Holdings. Alliant also offered support in the Wednesday filing for a $7 billion plan of Milwaukee-based Wisconsin Energy, which includes five new power plants in Oak Creek and Pleasant Prairie. -- On the Net: CUB: http://www.wiscub.org/ Alliant Energy: http://www.alliant-energy.com Wisconsin Public Service Commission: http://www.psc.state.wi.us Wisconsin Energy: http://www.wisenergy.com/ Madison Gas & Electric: http://www.mge.com Use this file to download and print all the articles in this section (See attached file: Dow Jones Interactive-california-03233001-implications.doc) If you wish to be removed from the distribution list for this update please contact Pru Sheppard - DC. All recipients of this message have been Bcc'd as part of industry best practice for broadcast emails. +-------------------------------------------------------------+ | This message may contain confidential and/or privileged | | information. If you are not the addressee or authorized to | | receive this for the addressee, you must not use, copy, | | disclose or take any action based on this message or any | | information herein. If you have received this message in | | error, please advise the sender immediately by reply e-mail | | and delete this message. Thank you for your cooperation. | +-------------------------------------------------------------+ - Dow Jones Interactive-california-03233001-selected.doc - pic24389.pcx - pic05075.pcx - Dow Jones Interactive-california-03233001-implications.docMessage-ID: <31290720.1075848154649.JavaMail.evans@thyme> Date: Tue, 27 Mar 2001 19:42:00 -0800 (PST) From: suzanne_nimocks@mckinsey.com To: skean@enron.com Subject: California Power Crisis Update (No. 10) Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: X-To: SKean@enron.com X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_4\Notes Folders\Discussion threads X-Origin: KEAN-S X-FileName: skean.nsf We have been pulling together these weekly(sometimes more often) summaries for internal purposes. Would you find it helpful to be on the distribution list? Hope you are doing well. Look forward to touching base soon. ----- Forwarded by Suzanne Nimocks/HOU/NorthAmerica/MCKINSEY on 03/28/2001 03:41 AM ----- Memorandum TO: Pru Sheppard BCC: Suzanne Nimocks FROM: Pru Sheppard B. Venki Venkateshwara DATE: March 27, 2001 California Power Crisis Update (No. 10) DEVELOPMENTS THIS WEEK, 3/23/2001 The weeks highlights include: ? Continued indications that the issue of market power and possible remedies for it is likely to remain a high profile issue in California and elsewhere (both retroactively and prospectively) ? An ironical situation with respect to QFs in which QF power under contract is effectively being released into the market at higher prices ? A court order requiring Reliant to continue to sell power to the ISO even if it is not being paid in a full and timely manner ? Another Stage 3 emergency and rolling blackouts Market power There are continued indications that the issue of market power will not be settled simply. This week there was a lengthy and politically influential front page story in the New York Times about FERCs passive approach to policing generators (Critics Say U.S. Energy Agency Is Weak in Oversight of Utilities). The story was by Jeff Gerth and Joseph Kahn. (Jeff Gerth's 1992 story on the Whitewater deal is viewed by journalists to have been the origin of what eventually became a multi-year investigation of Bill Clinton.) The key issues are familiar: ? Does market power exist to a degree that warrants remedies such as price caps, refunds, and so on? ? If so, what is the basis for asserting that market power exists and what is the remedy? (See the discussion in the New York Times article on the "good hours" vs. "bad hours" approach and the associated political decision not to deal with "good hours"). ? Can market power be used as leverage to eventually settle generator bills in California at something less than 100 cents on the dollar. (The California ISO filed a complaint claiming $6 billion in overcharges this week.) The QF irony Through the 1990s, QF contracts were projected to be the source of stranded costs because they were priced "way above market." In recent months, in California, they look like a bargain (although some are not such great bargains because a portion of their price is tied to gas). You would think that the utilities would request QFs to maximize their output. But credit problems have created an ironical situation. The facts: ? PG&E and Edison have not been paying the QFs fully and promptly for some time. ? The QFs form a creditors committee and threaten to push PG&E and Edison into bankruptcy. (Some gas-fired QFs had to shut down because they did not have money to pay for the gas.) ? Last week's court decision allows MidAmerican/CalEnergy to essentially sell its power to others even though the QF contract "dedicates" the output to the purchasing utility. ? CalEnergy does so immediately, selling to El Paso. The Reliant Order A court ordered Reliant to continue to sell to the ISO, when requested, regardless of whether Reliant had been paid fully and promptly for past deliveries to the ISO. Reliant announced it will appeal the order. This is somewhat of a contrast to the QF situation except that the circumstances governing the 2 situations are probably different. The QF contracts pre-date the ISO and are with the utilities and most likely make no reference to providing power during emergencies. In fact, many QF contracts have the opposite provision: authority for the utility to cut takes during so-called "light load" periods. Stage 3 emergency and rolling blackouts--again There was another Stage 3 emergency in California ? with rolling blackouts this week. This prompted everyone to wonder why this was happening in March. Among the factors: ? Increased demand from summer-like temperatures ? Cutbacks in imports ? Loss of 1400 MW due to a transformer fire at an Edison plant ? Loss of about 3100 MW from QF plants that were forced to shutdown because they could not afford gas bills (VV) MARKET COMMENTARY (For easier printing of all the articles in this section use the file at the end of the section) Critics Say U.S. Energy Agency Is Weak in Oversight of Utilities By JEFF GERTH and JOSEPH KAHN 03/23/2001 The New York Times Page 1, Column 1 c. 2001 New York Times Company WASHINGTON, March 22 -- The pressure was intense when federal regulators met privately last month to debate remedies for soaring electricity prices in California. Officials of the Federal Energy Regulatory Commission, the agency whose mandate is to ensure ''just and reasonable'' electricity rates nationwide, had evidence that a few companies had been selling electricity to California at prices far above the cost of generating it. The agency faced an imminent deadline to challenge those prices or let the companies possibly pocket hundreds of millions of dollars in unfair profits. An internal memorandum laid out two choices. The agency could audit and punish ''bad actors,'' the companies that were exploiting the market. Or it could identify ''bad hours,'' when electricity shortages were most acute and spiking prices were arguably nobody's fault, and order refunds for only the most exorbitant prices. ''It may be easier to identify bad hours than bad actors,'' the memorandum said. The commission took the easier way. It decided not to investigate reports of abuses by companies, but issued an order that could require them to refund to the state utilities up to $124 million collected during a relatively few ''bad hours'' in January and February. That is hundreds of millions of dollars less than California might have claimed, since the most potential overcharging occurred during ''good hours,'' when power was more plentiful but prices were often just as extreme. The order ignored those hours. Today, in a criticism of the agency's lack of aggressiveness, California regulators estimated that generators had charged $6.2 billion above competitive levels over 10 months. They urged the agency to dig deeper, hoping it would demand more refunds or other stiff remedies. But the agency's track record -- one of complacency in the eyes of state officials -- leaves California regulators skeptical that Washington will confront the big power producers. The small, obscure agency, tucked behind the rail yard of Union Station here, has largely soft-pedaled its role as the electricity industry's top cop, even though it has wide authority to keep power companies in line. To keep rates reasonable, it can impose price caps, strip companies of the right to charge market rates, force them to return excessive profits and even suspend deregulation altogether. Instead, the agency has largely left it to private companies to pry open the $250 billion electricity industry, which has historically been controlled by monopoly utilities and state officials. The agency's defenders, including its chairman, Curt Hebert Jr., a fierce advocate of unfettered markets, say that its largely hands-off approach reflects the delicate balancing of competing interests -- a commitment to protect consumers while not stifling market forces. But politicians, utility executives, energy economists and local regulators say California's rolling blackouts and skyrocketing electricity prices are the signs of a market running amok. They accuse the agency of standing aside as companies manipulate their way to windfall profits. The agency's critics, who include one of its own commissioners and numerous staff members, say that its enforcement mission has been blunted by free-market passions and the influence of industry insiders in its ranks. When the agency began its first national investigation of high electricity prices last year, it named a newly recruited industry insider, Scott Miller, to lead the effort. Mr. Miller and his colleagues said in their report that there was ''insufficient data'' in California to prove any profiteering by generating companies. Yet his own former employer, PG&E Energy Trading, was at the time a subject of a civil antitrust investigation by the Justice Department that focused on electricity market abuses in New England. The agency has given state regulators a lead role in monitoring local power markets. Yet even as these regulators have urged the agency to be more aggressive in investigating suspicions that companies have abused their power in California, New England, the Midwest and the mid-Atlantic, they have frequently been ignored or rebuffed. Critics say that the agency began deregulation before it was ready or willing to make sure the markets worked effectively. They accuse it of showing favoritism to industry -- allowing companies, for example, to ignore requirements to file detailed reports of market transactions that are critical to proving accusations of market abuses. ''We need to wake up to the fact that this is a dysfunctional market that is being gamed and manipulated by those who participate in it,'' said William Massey, a commissioner of the agency who has become one of its leading critics. The agency's inaction, the critics say, leads to ''gaming'' -- jockeying for profits that does not necessarily involve illegality -- and outright market manipulation. Consumers and utilities are the victims, paying billions of dollars more for electricity than if the markets were truly competitive. Agency officials acknowledge that enforcement of market rules to curb gaming and manipulation had not been a high priority in previous years. But they defended their recent California order as proof that they intend to keep markets free of abuse. They add that the agency is also pressuring two generators to refund almost $11 million for possibly manipulating the California market last spring. Agency officials and some outside analysts say that poorly conceived deregulation plans by states, a shortage of power plants, rising natural gas prices, and even the weather have had more impact on electricity prices than abuses by companies or any failings by the agency. They say the agency must balance the competing interests of generators, local regulators and utility companies if it is to keep deregulation on track. ''We're trying to craft a system that gives breathing room to develop a market, but not so much room that undue market power punishes consumers,'' Mr. Hebert said. Fight Over Deregulation Today's debate traces back to the 1930's, when President Franklin D. Roosevelt backed legislation to break up utility monopolies. The Federal Power Act of 1935 gave the Federal Power Commission a mandate to ensure ''just and reasonable'' electricity rates. The Federal Power Commission was abolished in 1977 and replaced by the Federal Energy Regulatory Commission, an independent agency with 1,200 employees that also oversees oil pipelines and the natural gas market. The president appoints the chairman and four commissioners -- two Democrats and two Republicans with staggered terms of five years. Two Republican seats are currently unfilled. The deregulation of the electricity markets began in the late 1980's, after the agency had begun opening the gas markets. By 1996, the commissioners issued a landmark order that forced utility companies to open their transmission lines to other utilities and electricity wholesalers. The commission and many private economists expected that by prying open protected markets, electricity prices would immediately fall. That possibility set off a deregulation frenzy, most prominently in California, New York, New England and the mid-Atlantic states. Generating companies rushed to expand in the new, borderless market. But the agency's balancing act has grown more difficult as electricity deregulation has spread nationwide. Congress has forced it to trim its staff in recent years. Officials complain that investigating abuses in electricity markets strains their resources. And as the California crisis has worsened, the commissioners have begun sparring publicly among themselves about what to do. This week, Mr. Massey, a Democratic commissioner, and Mr. Hebert (pronounced AY-bear), a Republican, sat side by side before a House panel and argued diametrically opposed positions. Mr. Hebert said high prices in California ''were sending the right signals to get supply there.'' Mr. Massey called the prices that generators were charging ''unlawful'' and said that his agency, by not reining them in, ''is simply not doing its job.'' The agency's leadership has been in flux for months. Congressional and industry officials in Washington say President Bush is considering replacing Mr. Hebert, whom he named to the top post less than two months ago, with Pat Wood, who runs the Texas public utility commission. A White House spokeswoman had no comment on the reports. Though Mr. Hebert's positions are not far from those of the Bush administration, his relations with California leaders may have made his position tenuous. Mr. Hebert, a Mississippian who is a close ally of the Senate majority leader, Trent Lott, has warred with California politicians who have proposed new solutions to the crisis there. Mr. Hebert, who has served as a commissioner since 1997, has often taken the most ideologically free-market position of any commissioner. He flatly rejects the idea of price caps on electricity as hopelessly ineffective and contrary to market forces. When Gov. Gray Davis outlined a plan to have the state buy transmission lines to relieve utility companies' debt, Mr. Hebert's response was dismissive. ''It's not in the interest of the American public,'' he pronounced. Even as new electricity markets opened in the summer of 1999, they started producing nasty shocks. The mid-Atlantic region experienced some early volatility. As the turmoil grew, economists began raising the alarm about a phenomenon called ''market power,'' the ability of energy traders in the new national market to sustain prices above the competitive level. Proving such abuses is difficult, because it requires comparing tens of thousands of separate electricity transactions with the costs of the generators that initiated them. Joseph Bowring, who heads the market monitoring unit of the nonprofit entity that operates the mid-Atlantic transmission system, said that power companies there had exercised some market power. But only the Federal Energy Regulatory Commission, not local regulators, had the authority to collect the data to determine how much market power had been exercised and whether it had been abusive or not, he said. Mr. Bowring said he talked to agency officials about doing so. In the end, Mr. Bowring and several agency officials said, the agency chose not to investigate. The decision roiled some agency officials. Ron Rattey, a veteran agency economist, wrote a memorandum last June describing the staff as ''impotent in our ability to monitor, foster, and ensure competitive electric power markets.'' The staff, the memorandum said, did not even enforce a requirement that power companies file detailed quarterly reports listing essentially every sale they make. Such data would have been useful to Mr. Bowring. Local-Federal Clash Local regulators who want to ensure competitive prices often have to act on their own. Monitors in New England have intervened about 600 times since 1999 to correct prices they determined had been caused, at least in part, by market manipulation. The federal agency has sometimes chastised them for interfering too much. The industry, not surprisingly, shares that view. One vocal critic was Mr. Miller. Before the agency recruited him last July to head its division of energy markets, he was director of policy coordination for the national energy-trading unit of PG&E Corporation, the California holding company whose assets also include Pacific Gas and Electric, the California utility. Although the utility has lost billions of dollars during California's crisis, Mr. Miller's former unit has become one of the most profitable new energy traders nationwide. PG&E Energy Trading, by several estimates, is now the second-largest seller of electricity in New England. The company has had a rocky relationship with regulators. They intervened several times in 1999 and 2000 to retroactively cancel auctions they said produced excessive profits for PG&E and other companies. Mr. Miller denounced the practice, though he acknowledged in public testimony that his company sometimes charged ''very high'' prices when it could. ''One person's predatory pricing is another person's competitive advantage,'' Mr. Miller said at a public hearing on deregulation in Texas in 1999. New England regulators too often acted as ''judge, jury and executioner'' when overseeing the market, he said. One year later, Mr. Miller and his new colleagues at the federal agency got a chance to examine New England's problems from the regulators' perspective. Their Nov. 1 report attributed New England's frequent price gyrations to technical and regulatory flaws. As Mr. Miller's team was preparing its report, the Justice Department, whose threshold for stepping into possible industry wrongdoing is far higher than the agency's, began looking into whether price spikes in New England pointed to unlawful monopoly power or collusion, people contacted by the department during that inquiry said. One subject of the civil inquiry is possible price manipulation in one of New England's ancillary services markets, people contacted by the department said. They said the department was examining whether PG&E and two other companies tried to corner that market for several months early last year. PG&E confirmed that the Justice Department had contacted it, but denies wrongdoing and says it has cooperated with the department's requests. Mr. Miller has declined to comment on his role at PG&E or at the agency. His supervisors defended his work and said they had detected no conflict of interest between his work at PG&E and his duties at the agency. Those duties brought Mr. Miller to California last August. With electricity prices there soaring, he and his colleagues sat down with several utility executives at the agency's San Francisco office. One executive, Gary Stern, director of market monitoring for Southern California Edison, wanted the agency to stop what he suspected were market abuses by power generators. He provided a road map to help investigators figure out how power companies traded power contracts -- and whether they had manipulated the markets. But when Mr. Miller and his team approached 11 generators and marketers -- including his old employer -- a few weeks later, they did it their way. They asked eight questions, many of them imprecise, like: ''Describe your strategy for bidding generation resources into market.'' This question, Mr. Stern said in a recent interview, ''was equivalent to asking a suspected burglar how he spent his day.'' Some agency officials also thought the team should probe deeper. Mr. Rattey recommended that Mr. Miller seek the quarterly pricing reports that marketers were supposed to file. But his suggestion was not adopted, agency records show. Daniel Larcamp, Mr. Miller's supervisor, said ''there might have been more information that could have been obtained'' in the California inquiry. But he said the commission gave the staff only three months to finish, making it impossible to collect and analyze the reams of data involved. For Mr. Miller, agency documents show, the investigation was so time-consuming that he had no time to fill out the financial disclosure form required of new federal employees. Mr. Miller submitted his form in late January, after a reporter requested it. Agency lawyers approved the form, but only after he provided additional information about his job and compensation from PG&E. The lawyers said Mr. Miller's participation had been permissible because PG&E was not the subject of the investigation. When the staff report was issued on Nov. 1, it found high prices and problems in the design of the California market. But while the companies ''had the potential to exercise market power,'' the commission said, there was ''insufficient data'' to prove that they did. Some marketers saw the report as an exoneration. ''This has been looked at several times, most notably by the FERC and nobody has found any evidence of market manipulation and profiteering,'' Rob Doty, the chief financial officer of Dynegy Inc., told a reporter earlier this year. California Inquiry The agency has recently shown signs of wanting to apply pressure on generators. But its early efforts show how it is treading on new and uncertain turf. When the California crisis grew severe last December, the commission issued a refund order, a shot across the bow for generators charging high prices. It required them to submit detailed data any time they sold electricity in California for more than $150 per megawatt hour, considered at the time a fair estimate of the highest costs any of them faced. It also told generators that for the next several months, they could be forced to give refunds if the agency found that they had charged excessive prices. The commission also said that it would examine bidding practices and strategies for withholding generating capacity to ferret out any efforts to artificially raise prices. When the agency's own 60-day deadline for examining market data in January approached, however, it became clear that staff members had not made any detailed examination. Instead, staff members said, the agency scrambled to forge a last-minute compromise that would allow it to issue a statement opposing high prices in the state without a time-consuming investigation. During this scramble, a senior staff member, Kevin Kelly, suggested focusing on bad hours instead of bad actors. ''Our attempts to find illegal behavior or legal 'misbehavior' by sellers ('bad actors') always seems to fail,'' his memorandum said. It said that the agency could more easily blame high prices on acute shortages during the most critical hours. The suggestion won the day. The commission decided to limit its order to the hours when California declared a Stage 3 emergency, when supplies are critically low. Mr. Stern of Southern California Edison and several private-sector economists have attacked the economic logic of that order. They said that the commission has focused on times when prices might be legitimately high. The bigger worry: Generators can and often do sustain artificially high prices when supplies are not as tight, they say. Mr. Massey, the Democratic commissioner, dissented from the decision for those reasons. Because most high-priced transactions in January and February did not occur during bad hours, he argued, the commission effectively chose to bless as ''just and reasonable'' the hefty profits generators are making from the California crisis. ''The problem with my agency is that we're so carried away with the rhetoric of markets that we've gotten sloppy,'' Mr. Massey said. ''We're talking about electricity. It's the juice of the economy, so it's got to be available and reasonably priced.'' Williams defends pricing of electricity 03/23/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. TULSA, Okla. (AP) - Williams Cos. Inc. says it can justify the rates it charged for wholesale power, despite accusations from federal regulators that it sold over-priced electricity to California. Federal regulators claim Williams Energy Marketing and Trading Co., a unit of Tulsa-based Williams, owes California more than $40 million in refunds for power it sold to the state's Independent System Operator. The Federal Energy Regulatory Commission says that Williams is one of several power providers responsible for $124 million in overcharges from transactions in January and February. The Independent System Operator, which manages the state's power grid, claims the state was overcharged $6.2 billion by 21 wholesale power providers, including Williams, between May and February. Williams says the rates it charged California were fair and were based on production costs and market conditions. "Williams is confident that it performed within the guidelines established by the ISO," said Williams spokeswoman Paula Hall Collins. "We felt like we had worked within the regulations set up by ISO." According to the commission, power prices levied by Williams in January and February exceeded federal price ceilings based on the cost of natural gas and other market conditions. However, the price ceilings were established after the ISO accepted Williams' power prices, Collins said. The commission will review Williams' explanation and either accept the justification or order the company to pay refunds. Allegheny Energy makes big California connection 03/23/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. HAGERSTOWN, Md. (AP) - Allegheny Energy Inc. said Thursday it has agreed to sell $4.5 billion worth of power to California's electricity-purchasing agency over the next 10 years. The company said the contract call for Allegheny to provide up to 1,000 megawatts that the Hagerstown-based company has secured from western generating plants through its new energy trading division, Allegheny Energy Global Markets - formerly Merrill Lynch Global Energy Markets. "This is a win-win for both the state of California and Allegheny Energy. It provides a long-term source of fixed-price energy and should help to stabilize prices in California," said Michael P. Morrell, president of the Allegheny Energy Supply division. Allegheny Energy is the parent of Allegheny Power, which delivers electric energy and natural gas to parts of Maryland, Ohio, Pennsylvania, Virginia and West Virginia. Williams plans expansion of pipeline to help power Calif. 03/23/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. SALT LAKE CITY (AP) - The Williams Cos. plans to expands its Kern River pipeline, which runs through Utah, to provide more natural gas for generating plants in California. Williams' gas pipeline unit in Salt Lake City said Thursday that it plans to construct nearly 700 miles of additional pipeline that will run parallel to its existing Kern River line. Construction on the $1 billion project is expected to begin next year and is scheduled for completion in May 2003, said Kirk Morgan, director of business development for Kern River pipeline. "Shippers are seeking more access to natural gas from the Rocky Mountain basin, where producers are aggressively stepping up production," Morgan said. The new pipeline is expected to deliver about 900 million cubic feet of natural gas per day to markets in Utah, Nevada and California. Most of the gas will be used for generating plants planned in California. If all of the pipeline's capacity were used to generate electricity, it could produce about 5,400 megawatts. "That is enough to light around 4.5 million homes," Morgan said. The original Kern River line was completed in 1992. It enters Utah from Wyoming then crosses into the Salt Lake Valley near Bountiful. It turns south near the Salt Lake City International Airport then runs the length of the state before passing into southern Nevada and winding up near Bakersfield, Calif. It currently transports 700 million cubic feet of natural gas per day. Williams, based in Tulsa, Okla., recently filed an emergency application with federal regulators to install additional pumping stations on the line to increase its capacity by 135 million cubic feet per day. That $81 million pumping station project should be completed by July 1. During the 2002 construction period, the Kern River project will employ between 1,500 and 1,800 people. The company estimates annual property taxes it pays to Utah counties will increase from $3.5 million to about $7 million. Questar will be one of the customers on the new pipeline, Morgan said. The utility wants to supply additional gas to southern Utah cities, including St. George and Cedar City. "Our own pipelines serving southern Utah are at full capacity so this is an opportunity to transport additional gas into those areas from company-owned supplies in Wyoming," said Questar Gas spokeswoman Audra Sorensen. Calif Energy Commission OKs 3 Pwr Plants Worth 2,076 MW 03/23/2001 Dow Jones Energy Service (Copyright (c) 2001, Dow Jones & Company, Inc.) (This article was originally published Thursday) LOS ANGELES -(Dow Jones)- The California Energy Commission Wednesday approved three power plants worth 2,076 megawatts, two of which are scheduled to come on line by the end of 2002, a CEC spokesman said Thursday. The plants approved include BP Amoco PLC (BP) unit ARCO Western Energy's 500 megawatt Western Midway Sunset Project, slated to come on line in October 2002; Caithness Energy's 520 MW Blythe Power Plant, to come on line by Dec. 31, 2002; and Thermo Ecotek's 1,056 MW Mountainview Power Plant, scheduled to come on line in April 2003. All three of the new plants will be natural gas-fired combined-cycle plants. The $550 million Mountainview plant will be located in Southern California, near San Bernadino. The $300 million Western Midway-Sunset plant will be located in central Kern County, while the $250 million Blythe plant will be located in the city of Blythe in Riverside County. The latest approvals bring to 13 the total number of plants approved since April 1999 by the CEC, a spokesman said. Those plants will supply 8,405 MW to the state, which has seen rolling blackouts and spiking wholesale power prices in the last six months, in part due to lack of supply. -By Jessica Berthold, Dow Jones Newswires; 323-658-3872; jessica.berthold@dowjones.com Some CalEnergy Power Could Be Sold Outside Calif - CEO 03/23/2001 Dow Jones Energy Service (Copyright (c) 2001, Dow Jones & Company, Inc.) (This article was originally published Thursday) LOS ANGELES -(Dow Jones)- Some of CalEnergy Operating Corp's power could end up being sold outside of California, though that is not the company's intent, CalEnergy Chairman and CEO David Sokol said in a conference call Thursday. CalEnergy, an affiliate of MidAmerican Energy Holdings Co, which is majority owned by Warren Buffett's Berkshire-Hathaway (BRKA), was given legal authority Thursday to suspend 270 megawatts of power delivery to Edison International (EIX) utility Southern California Edison and sell on the open market, because SoCal Edison has not paid its bills since November. CalEnergy stopped supplying power to SoCal Ed immediately following the court ruling. "We stopped supplying power at 1 PM (PST) and have been selling to parties that will pay since then....We are selling it to marketers; our current marketing agent is El Paso Corp (EPG) and they will sell it for us," Sokol said. Sokol added that while it was his company's intention to have its power sold to California, that could not be guaranteed. "We leave the energy selling to El Paso....We've directed them that we would like the power to stay in California but we can't stop them," from selling out of state, Sokol said. Wholesale prices on the open market are about $400-$500 a megawatt-hour, three times more than what the company had received under its contract with SoCal Ed. The court's ruling did not address the $45 million SoCal Ed still owes CalEnergy for November and December power, and Sokol said that his company's separate lawsuit on that matter sought to attach the utility's assets as payment for that debt. Sokol said the court's ruling had "significant implications" for the entire community of small, independent generators, known as qualifying facilities or QFs, who have not received payment from SoCal Ed. "Edison's own lawyer said it best....that every QF in the state will begin to mitigate if the judge allowed us (to sell on the open market)," Sokol said. Sokol said his company was prepared to push SoCal Ed into involuntary bankruptcy Friday if CalEnergy hadn't won the case, but said he couldn't speculate whether other QFs may be more or less inclined to do so as a result of the court outcome. A group of renewable power suppliers, owed more than $100 million from SoCal Ed, said late Wednesday they want state lawmakers to release them for their supply contracts with PG&E Corp. (PCG) unit Pacific Gas & Electric and SoCal Ed until the utilities are restored to financial stability. The utilities claim close to $13 billion in undercollections due to an inability to pass high wholesale power costs to customers under a rate freeze. In a statement, SoCal Ed said it opposed CalEnergy's bid to suspend its QF contract because the utility believed Gov. Gray Davis and state regulators are close to resolving "very legitimate financial concerns of CalEnergy and other QF suppliers." SoCal Ed said it was concerned that CalEnergy's request to sell to third parties would lead to a major supply shortage in California. The utility said it has informed the QFs that it is working to resolve the issue without giving unfair advantage to one class of creditors. While many of the state's large power suppliers have been paid by on a forward basis for the power they sell into California, the QFs, which make up one-third of the state's total power supply, haven't been paid by SoCal Ed since November. PG&E has made partial payments to its QFs. -By Jessica Berthold, Dow Jones Newswires; 323-658-3872, jessica.berthold@dowjones.com (Jason Leopold contributed to this article.) California and the West Judge Frees Small Firm From Edison Contract KEN ELLINGWOOD; DAN MORAIN TIMES STAFF WRITERS 03/23/2001 Los Angeles Times Home Edition A-3 Copyright 2001 / The Times Mirror Company El CENTRO -- California's balance of electrical power shifted slightly Thursday when an Imperial County judge temporarily freed a small geothermal energy producer from its contract with Southern California Edison, allowing it to sell power on the open market. The ruling by Superior Court Judge Donal B. Donnelly could lead to a mass exodus by hundreds of small energy producers that have been selling power to the state's financially troubled utilities for months without getting paid. At the same time, it may have staved off plans by a group of the small generators to send Edison into involuntary bankruptcy as early as today. In Sacramento, energy legislation pushed by Gov. Gray Davis passed in the state Senate but foundered in the Assembly. The measure was intended to ensure that the state gets repaid for the electricity that it has been buying on behalf of Edison and Pacific Gas & Electric, which say they lack the cash and credit to purchase power. The bill also was supposed to guarantee that the small, alternative energy producers--which together provide nearly a third of the state's power--get paid. But Assembly Republicans opposed it, saying it hadn't been given sufficient scrutiny. The impact of the small producers was made clear in Imperial County, where Edison's failure to pay CalEnergy, the county's biggest property taxpayer, had outsize implications. CalEnergy had put county officials on notice that it was about to miss a $3.8-million property tax payment. The uncertainty had prompted the tiny Calipatria Unified School District to postpone a bond issue for badly needed school repairs. Among CalEnergy Chairman David Sokol's first acts after the judge's ruling Thursday was to promise Imperial County Supervisor Wally J. Leimgruber that the company would pay its property taxes on time. "That is great news," Leimgruber said. Within hours of its court victory, CalEnergy had stopped transmitting geothermal power to Edison and begun selling it to El Paso Energy, a marketing company that purchased the energy at prevailing rates and resold it on the spot market. Some of the more than 700 other small energy producers in the state said they were considering similar action against Edison and Pacific Gas & Electric. "We absolutely need the right to sell to third parties," said Dean Vanech, president of Delta Power, a New Jersey company that owns five small gas-fired plants in California and is owed tens of millions of dollars by Edison. Sokol praised the Imperial County judge and said his company simply wanted the authority to sell its power "to a credit-worthy company that, in fact, pays for the power." An Edison spokesman said the company was disappointed with the ruling, but sympathized with CalEnergy and other small producers because "California's power crisis has placed [them] in financial distress, just as it has placed utilities in financial distress." Edison expressed concern that the ruling would prompt CalEnergy and other small producers to sell their power out of state. Sokol said CalEnergy had specifically told El Paso Energy that it hoped its power would remain in California, "but if someone wants to pay a higher price out of state, we can't stop them." Sokol said that Edison still owes CalEnergy $140 million and that the company--along with seven other small producers--had been prepared to file a petition in federal bankruptcy court in Los Angeles today forcing the utility into involuntary bankruptcy. He said his company no longer intends to do so, and he believed--but wasn't certain--that the other companies would shelve their plans. Edison filed papers Thursday with the federal Securities and Exchange Commission showing that it owed $840 million to various small electricity producers, many of which rely on renewable energy sources such as geothermal steam, solar energy or wind. The alternative energy producers--and utilities--strenuously objected to the legislation considered in Sacramento on Thursday. The bill, spelling out how the utilities are to pay the state and the small producers, passed the Senate on a 27-9 vote, the exact two-thirds margin required. But it stalled in the Assembly on a 46-23 party-line vote, well short of two-thirds. "When I was a citizen back in Lancaster, I heard these stories about pieces of legislation that were cooked up late at night, that . . . were cut and pasted together and were rammed through by the Legislature," Assemblyman George Runner (R-Lancaster) said. "That's exactly what we have before us." The alternative electricity generators, including oil companies, warned that they would lose money under the Davis proposal, while representatives of Edison and PG&E, which have amassed billions in debt in the worsening energy crisis, said the legislation would push them deeper into the hole. "There isn't enough money," Edison attorney Ann Cohn testified at a Senate hearing on the bill Thursday. "It is a very simple question: Dollars going out cannot be greater than dollars coming in." The bill, AB 8X, combined several proposals. First, it sought to clarify earlier legislation by spelling out that Edison and PG&E must pay the state all money collected from consumers for electricity that the state has been buying. Additionally, the bill would turn over to the California Public Utilities Commission the thorny issue of how much to pay alternative energy producers for their electricity. Wind, solar and geothermal producers might agree to the prices offered by the administration. But most of the alternative energy producers, including Chevron and British Petroleum, use natural gas to generate electricity through "cogeneration," a process of creating steam for both electric generation and heat. With natural gas prices high, they contend, they would lose money at the prices Davis is offering. * Ellingwood reported from El Centro, Morain from Sacramento. Times staff writers Mitchell Landsberg in Los Angeles and Jenifer Warren, Nancy Vogel and Carl Ingram in Sacramento contributed to this story. (BEGIN TEXT OF INFOBOX / INFOGRAPHIC) Power Points Background The state Legislature approved electricity deregulation with a unanimous vote in 1996. The move was expected to lower power bills in California by opening up the energy market to competition. Relatively few companies, however, entered that market to sell electricity, giving each that did considerable influence over the price. Meanwhile, demand has increased in recent years while no major power plants have been built. These factors combined last year to push up the wholesale cost of electricity. But the state's biggest utilities--Pacific Gas & Electric and Southern California Edison--are barred from increasing consumer rates. So the utilities have accumulated billions of dollars in debt and, despite help from the state, have struggled to buy enough electricity. * Daily Developments * Overcharges by major electricity suppliers were estimated at $6.3 billion, up from the $5.5 billion first thought, California's power grid operator said. * Electricity producers denied that they have profiteered and argued that Cal-ISO's figures don't take into account all their costs. * A Superior Court judge's ruling Thursday freeing a small producer from its contract with Edison could lead to a mass exodus by small energy producers that have been selling to the utilities without getting paid. * Verbatim "If these guys have such high costs ... how come they're making so much money?" --Gary Stern, Edison's director of market monitoring and analysis, referring to power producers Complete package and updates at www.latimes.com/power Grid Operator Says California Paid Too Much for Power By Rebecca Smith and John R. Emshwiller Staff Reporters of The Wall Street Journal 03/23/2001 The Wall Street Journal A2 (Copyright (c) 2001, Dow Jones & Company, Inc.) California's electric-grid operator said power suppliers may have overcharged the state and its utilities by $6.2 billion, or a total of 30%, in a 10-month period, and has asked federal regulators to step up their policing of electricity markets. Meanwhile, a California state judge handed down a decision involving small power producers that could result in more electricity being made available in the energy-starved state, but likely at greater cost to the state government. The $6.2 billion figure was contained in a market analysis by the California Independent System Operator filed yesterday with the Federal Energy Regulatory Commission. The ISO says it isn't seeking a refund -- for the May through February period -- because its analysis lacked important market data. For example, it estimated costs for 21 suppliers based on published prices for natural gas, not on specific data showing what each generator actually paid for the fuel. "We don't know how much gas actually was purchased at spot-market prices," said Anjali Sheffrin, the ISO's head of market analysis. Charles Robinson, general counsel for the ISO, said FERC needs to become "more aggressive about market-power mitigation." The ISO's filing, he said, was intended to push the agency in that direction, since FERC is responsible for policing deregulated electricity and natural-gas markets. He said that if the FERC doesn't act, the state of California may find ways to discipline the market, such as through the state attorney general's office. The attorney general has been investigating the state's electricity market for many months but hasn't brought any court action. Dynegy Inc., a big owner of power plants in California, said it will provide additional information to FERC supporting its position that the prices it has charged for power have been "just and reasonable." The Houston company was one of 13 energy suppliers that the FERC this month ordered to pay refunds totaling $124 million or "show cause" why it should be excused. Dynegy said the FERC analysis was flawed, because it used "inaccurate" prices for natural gas and pollution credits. While big power producers such as Dynegy came under attack, small power producers won a potentially significant victory in a state court in Southern California's Imperial County. A judge granted 10 geothermal plants operated by the CalEnergy Co. unit of MidAmerican Energy Holdings Co., a unit of Berkshire Hathaway Inc., of Omaha, Neb., permission to suspend deliveries of electricity to Southern California Edison Co. and instead seek other buyers. These plants, known as "qualifying facilities," are under long-term contract to Edison and other utilities but haven't been paid for months. Edison, a unit of Edison International, of Rosemead, Calif., says it has been unable to pay hundreds of millions of dollars in power bills to CalEnergy and others because it has been driven to the brink of insolvency by the state's failed utility-deregulation plan. While the CalEnergy case involves only about 320 megawatts of power, the repercussions could be far greater. Collectively, hundreds of qualifying facilities, or QFs, produce as much as 30% of California's electricity needs. QFs totaling 3,000 megawatts cut their production in recent weeks for lack of payment. This loss of output was a significant cause of the blackouts that hit California this week. Observers believe the CalEnergy court decision could give other QFs an opportunity to sell power in the open market, presumably to the state government that now is California's biggest energy buyer. An hour after the court decision yesterday, some 400 megawatts of power came back into the market, the ISO said. However, additional QF power sales on the open market could substantially increase the state's tab. Already, the state has allocated more than $4 billion for electricity purchases. Separately, Edison said in a Securities and Exchange Commission filing that its unpaid power bills could contribute to a write-off of as much as $2.7 billion for 2000. Because of uncertainty caused by the energy crisis, the company hasn't yet reported year-end earnings. Power regulators debate who should be exempted from blackouts By KAREN GAUDETTE Associated Press Writer 03/22/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. SAN FRANCISCO (AP) - State power regulators said Thursday they are working to exempt all California hospitals, regardless of size, from rolling blackouts. The Public Utilities Commission met with representatives from hospitals and investor-owned utilities after Los Angeles lawyer David Huard filed an emergency motion with the PUC on behalf of more than 500 hospitals throughout the state. Under PUC rules, hospitals with more than 100 beds are exempt from losing electricity during power emergencies. But during rolling blackouts Monday, at least a dozen hospitals from Long Beach to Clearlake were forced to use their backup generators. Pacific Gas and Electric Co. and Southern California Edison Co. say they blacked out those hospitals specifically because they have backup generators. Both utilities said the temporary blackouts were part of their overall efforts to spread the burden of blackouts over more of their customers. Linda Ziegler, director of business and regulatory planning for SoCal Edison, said the utility is following state law and will implement new guidelines if the PUC changes them. But hospitals say there is a 10-second lapse before emergency generators kick in, which could harm patients in the midst of delicate surgical procedures such as organ transplants or brain surgery. "You wouldn't fly a plane with only your emergency backup systems in place," said Ann Mosher, a spokeswoman for California Pacific Medical Center in San Francisco. "Backup generators are just that, they're not designed to keep the hospital up and running at full capacity." Ziegler said that power still goes out for reasons beyond the energy crisis, from incidents like lightning or a knocked-down power pole. "If it's a serious problem for the hospital it's certainly something they should be address just from an ongoing basis," she said. The exemption would cover all hospitals within the territory of the state's investor owned utilities PG&E, Southern California Edison and San Diego Gas and Electric. Hospitals within the range of municipally owned utilities, such as the Los Angeles Department of Water and Power, are separately regulated. For more than two decades, prisons, hospitals with more than 100 beds and emergency services such as fire and police departments have been classified as "essential" services, and are exempted from blackouts by order of state power regulators. After rolling blackouts began darkening the state in January, many other public service groups began seeking relief from power interruptions, including transit systems, schools and water districts. --- On the Net: http://www.cpuc.ca.gov Federal Judge Orders Reliant To Keep Selling Pwr To Calif 03/22/2001 Dow Jones Energy Service (Copyright (c) 2001, Dow Jones & Company, Inc.) SACRAMENTO, Calif. (AP)--A federal judge issued a preliminary injunction Wednesday ordering a major electricity wholesaler to continue selling to California despite its fear that it will not get paid. U.S. District Judge Frank C. Damrell Jr. said Californians were at risk of irreparable harm if Reliant Energy (REI) stopped selling power to the Independent System Operator, which oversees the state's power grid. The ISO buys last-minute power on behalf of utilities to fill gaps in supply. Damrell dismissed Reliant's attempt to force the state Department of Water Resources to back the ISO's purchases for the state's two biggest utilities. The state has been spending about $50 million a day on power for Pacific Gas and Electric Co. and Southern California Edison, both denied credit by suppliers after amassing billions of dollars in debts. The judge said he had no authority to force the DWR to pay for that power. Gov. Gray Davis has said the state isn't responsible for purchasing the costly last-minute power ISO buys for Edison and PG&E, despite a law authorizing state power purchases on the utilities' behalf. ISO attorney Charles Robinson said the ruling gives ISO operators "a tool to assist them in keeping the lights on in California." "Had the decision gone the other way, one could expect other generators to simply ignore emergency orders," Robinson said. Damrell's preliminary injunction will remain in effect until the Federal Energy Regulatory Commission rules on the matter. Damrell denied the ISO's request for preliminary injunctions against three other wholesalers - Dynegy Inc. (DYN), AES Corp. (AES) and Williams Cos. (WMB) - which agreed to continue selling to the ISO pending the FERC ruling. Spokesmen for Reliant, Dynegy, AES and Williams were out of the office Wednesday night and didn't immediately return calls from The Associated Press seeking comment on the ruling. The ISO went to court in February after a federal emergency order requiring the power sales expired. The judge then issued a temporary restraining order, requiring the sales, but dropped it after the suppliers agreed to continue sales to California pending his Wednesday ruling. The ISO said it would lose about 3,600 megawatts if the suppliers pulled out, enough power for about 2.7 million households. One megawatt is enough for roughly 750 homes. Grid officials said Reliant's share alone is about 3,000 megawatts. Reliant said the amount at issue actually is less than a fourth of that, because most of its output is already committed under long-term contracts. Reliant, which currently provides about 9% of the state's power, worries it won't get paid due to the financial troubles of PG&E and Edison. PG&E and Edison say that together they have lost about $13 billion since June due to soaring wholesale electricity costs that California's 1996 deregulation law bars them from passing onto customers. Calif Small Pwr Producers To Shut Plants If Rates Capped By Jason Leopold Of DOW JONES NEWSWIRES 03/22/2001 Dow Jones Energy Service (Copyright (c) 2001, Dow Jones & Company, Inc.) LOS ANGELES -(Dow Jones)- Many of California's independent power producers late Wednesday threatened to take their small power plants offline this week if state lawmakers pass legislation that would cap the rates the generators charge for electricity they sell directly to the state's three investor-owned utilities. At issue is a bill that would repeal a section of the state's Public Utilities Code, which links the 688 so-called qualifying facilities' electricity rates to the monthly border price of natural gas. Lawmakers, however, are poised to pass the legislation. State regulators are then expected to approve a measure that would restructure the fluctuating rates the QFs charge PG&E Corp. (PCG) unit Pacific Gas & Electric, Edison International (EIX) unit Southern California Edison, and Sempra Energy (SRE) unit San Diego Gas & Electric from $170 a megawatt-hour to $69-$79/MWh, regardless of the price of natural gas. Whereas each of the 688 QF contracts differed, largely because natural gas prices are higher in Southern California than Northern California, the state wants the QFs to sign a general contract with the utilities. The cogeneration facilities, which produce about 5,400 megawatts of electricity in the state, said the rates are too low and they won't sign new supply contracts with the utilities. "For $79/MWh, natural gas would have to be $6 per million British thermal unit at the Southern California border," said Tom Lu, executive director of Carson-based Watson Cogeneration Company, the state's largest QF, generating 340 MW. "Our current gas price at the border is $12.50." Other gas-fired QFs said the state could face another round of rolling blackouts if lawmakers and state regulators pass the legislation, which is expected to be heard on the Senate floor Thursday, and allow it to be implemented by Public Utilities Commission next week. Lu, whose company is half-owned by BP Amoco PLC (BP) and is owed $100 million by SoCal Ed, said the proposals by the PUC and the Legislature "will only make things worse." David Fogarty, spokesman for Western States Petroleum Association, whose members supply California with more than 2,000 MW, said the utilities need to pay the QFs more than $1 billion for electricity that was already produced. State Loses 3,000 MW QF Output Due Of Financial Reasons The QFs represent about one-third, or 9,700 MW, of the state's total power supply. Roughly 5,400 MW are produced by natural gas-fired facilities. The rest is generated by wind, solar power and biomass. About 3,000 MW of gas-fired and renewable QF generation is offline in California because the power plant owners haven't been paid hundreds of millions of dollars from cash-strapped utilities SoCal Ed and PG&E for nearly four months. Several small power plant owners owed money by SoCal Ed have threatened to drag the utility into involuntary bankruptcy if the utility continues to default on payments and fails to agree to supply contracts at higher rates. The defaults have left many of the renewable and gas-fired QFs unable to operate their power plants because they can't afford to pay for the natural gas to run their units. Others continue to produce electricity under their contracts with the state's utilities but aren't being paid even on a forward basis. The California Independent System Operator, keeper of the state's electricity grid, said the loss of the QF generation was the primary reason rolling blackouts swept through the state Monday and Tuesday. Gov. Gray Davis, recognizing the potential disaster if additional QFs took their units offline, held marathon meetings with key lawmakers Monday and Tuesday to try and hammer out an agreement that would get the QFs paid on a forward basis and set rates of $79/MWh and $69/MWh for five and 10 year contracts. He also said he would direct the PUC to order the utilities to pay the QFs for power they sell going forward. "After next week the QF problem will be behind us," Davis said Tuesday. "We want to get the QFs paid...the QFs are dropping like flies...and when that happens the lights go out." But this just makes the problem worse, said Assemblyman Dean Florez, D-Shafter, a member of the Assembly energy committee. "I don't know how we are going to keep the lights on," Florez said in an interview. "Many of these congenerators are in my district. They said if the legislation doesn't change they are going offline. This compounds the issue of rolling blackouts, especially now when we need every megawatt." Davis, who didn't meet with people representing the QFs, said he was handing the QF issue to the PUC because lawmakers failed to pass legislation that would have set a five-year price for natural gas and allow the QFs to sign individual contracts with the utilities. In addition, SOCal Ed opposed the legislation, saying the rates should be below $50/MWh. Some renewable power producers said they aren't vehemently opposed to the new rate structure because it guarantees them a higher rate than what was originally proposed. QFs Want Third Party Supply Contracts John Wood, who represents the SoCal Ed Gas Fired Creditors Committee, one of a handful of groups that have formed since January to explore options on getting paid by the utilities, said his group of gas-fired QF creditors want to be released from their supply contracts and sell to third parties. "Under our plan, we would be permitted to sell electricity to third parties (including the state Department of Water Resources) until a resolution to the crisis can be accomplished," wood said. Hal Dittmer, president of Sacramento-based Wellhead Electric in Sacramento, which is owed $8 million by PG&E, has 85 MW of gas-fired generation units offline. Under the state's plan, Dittmer said he risks going out of business. "I can't buy natural gas for what I would be paid under this decision," he said. "The state needs to quit kidding themselves that they don't need to raise electricity rates. All of this is being driven by an artificial construct that California can avoid raising rates." -By Jason Leopold, Dow Jones Newswires; 323-658-3874; jason.leopold@dowjones.com Power Strain Eases but Concerns Mount Energy: Officials say summer prices will be high, and a state report shows that contracts with generators are far short of goals. DAN MORAIN; JENIFER WARREN TIMES STAFF WRITERS 03/22/2001 Los Angeles Times Home Edition A-3 Copyright 2001 / The Times Mirror Company SACRAMENTO -- California's fragile electricity system stabilized Wednesday, but a Davis administration report suggested troubles ahead because the state could be forced to buy most of its power for the coming summer on the costly and volatile spot market. After two days of statewide blackouts, power plants that had been shut down were cranked up. Unseasonable heat tapered off. The operators of the statewide power grid relaxed their state of emergency. But plenty of ominous signs remained. Many small producers remained shut down, skeptical about Gov. Gray Davis' plan for utilities to pay them. State Controller Kathleen Connell issued a sharp warning about the high cost of the state's foray into the power business and announced that she will block an administration request that she transfer $5.6 billion into an account that could be tapped to pay for state purchases of electricity. And a report from the administration summarizing contracts between Davis and independent power generators showed that the state has signed contracts for only 2,247 megawatts of electricity, significantly less than the 6,000 to 7,000 megawatts previously claimed. While there are agreements in principle for the full amount, the report notes that generators can back out of the contracts for a variety of reasons, including the state's failure to sell bonds to finance power purchased by July 1. The Legislature has approved plans to sell $10 billion in bonds, but none have yet been issued. "We are exposed enormously this summer," Senate Energy Committee chairwoman Debra Bowen (D-Marina del Rey) said after looking at the report. "We owe the people the truth about how difficult this summer is going to be. We don't have a power fairy." Perhaps most significant, the report suggests that the contracts fall significantly short of Davis' stated goal of buying no more than 5% of the state's summer needs on the spot electricity market, where prices can be many times those of long-term contracts. After reading the report, Frank Wolak, a Stanford University economist who studies the California electricity market, said the numbers suggested that the state's long-term contracts will cover less than half of what the state will need this summer. "We're definitely short this summer, next summer and the summer of 2003," he said. California was forced to start buying electricity in December--at a cost of $50 million a day--because producers refused to sell to Southern California Edison and Pacific Gas & Electric. The two utilities amassed billions of dollars in debt when prices for wholesale power soared on the spot market. Vikram Budhraja, a consultant retained by Davis to negotiate deals with generators, said the report represents a "work in progress." He said the state may yet sign new contracts. However, Wolak said the contract figures confirm what he and others have been dreading: that summer is going to be rife with rolling blackouts unless serious steps to cut demand are taken immediately. Wolak and other experts say large industrial customers must be switched to real-time meters and pricing to persuade them to use the bulk of their energy at times of low demand. The head of the Energy Foundation, a San Francisco-based nonprofit that promotes sustainable sources of power, made the same proposal to Davis on Wednesday. "The government need not ask customers to swelter in the dark this summer," foundation President Hal Harvey argued in a letter. He also proposed a crash campaign to boost sales of efficient appliances and lightbulbs. He said the state needs to take over the utilities' contracts with alternative energy providers to ensure they stay in business, and sign new contracts for 1,500 megawatts of new wind power--the cheapest, fastest and cleanest source of new supply. Davis had proposed a formula Tuesday to force private utilities to pay the alternative producers, some of which have not been paid since November. But some of them warned Wednesday that Davis' plan offers them little incentive to turn on their generators. Alternative energy producers supply more than a quarter of the electricity consumed in California. Many producers generate electricity from wind, sun and geothermal sources. But most of them generate power using natural gas--and the cost of natural gas has been soaring. Several natural gas users said Davis' plan, which caps rates, won't cover their fuel costs. Davis assumes that the price of natural gas will fall. But small generators say they don't have sufficient purchasing power or sophistication to gamble on future prices. The Public Utilities Commission is expected to approve Davis' proposal next week. It offers producers two choices: 7.9 cents a kilowatt-hour if they agree to supply power for five years, or 6.9 cents a kilowatt-hour over 10 years. "The price of natural gas is higher than that," said Marty Quinn, executive vice president and chief operating officer of Ridgewood Power LLC, which owns three natural gas-fired co-generation plants. "If we operate, we'll lose money." Ridgewood is not operating, having been cut off by gas suppliers. The company sued PG&E last month seeking overdue payments and release from its contracts with the utility. A hearing is scheduled in El Centro today in another lawsuit filed by a small energy producer, an Imperial Valley geothermal producer that sued Edison for refusing to let it break its contract and sell on the open market. CalEnergy says Edison owes it about $140 million for energy sold since November. A company spokesman, Jay Lawrence, said CalEnergy was going ahead with its suit despite Davis' proposal. "We've had promises before," he said. In other developments: * A federal judge in Sacramento on Wednesday ordered Reliant Energy of Houston, a major producer, to continue selling power to California during emergencies, despite the company's argument that it may not be fully reimbursed. The order will remain in effect for 60 days or until the U.S. Federal Energy Regulatory Commission decides a related case. * Connell said the state budget surplus has shrunk to $3.2 billion because the state has spent roughly $2.8 billion on electricity. She criticized the administration for withholding basic information about state finances, and said she will begin an audit on Monday of the Department of Water Resources, which is responsible for purchasing power. Davis' aides said Connell took her action because the Democratic governor endorsed one of Connell's foes this week in the race for Los Angeles mayor, former Assembly Speaker Antonio Villaraigosa. A Connell aide scoffed at the notion. * Sen. Dianne Feinstein (D-Calif.) said she "never has had a response" from President Bush after writing him last month for an appointment to discuss the California energy crisis. In a wide-ranging lunch talk with reporters in Washington, she deplored the fact that "huge, huge profits are being made" in the California crisis, and said "an appropriate federal role" would be to guarantee a reliable source of power until the state can get nine new generators online. * Times staff writers Mitchell Landsberg in Los Angeles and Robert L. Jackson in Washington contributed to this report. (BEGIN TEXT OF INFOBOX / INFOGRAPHIC) Power Points Daily Developments * Wholesale electricity suppliers overcharged by about $5.5 billion between May and last month, and that money should be refunded to taxpayers and utilities, according to a Cal-ISO report. * The state may have to buy most of its power for summer on the costly spot market, which could drive consumers' bills up, a Davis administration report concludes. * State Controller Kathleen Connell said she will block a request by the Davis administration for $5.6 billion for state purchases of electricity. Verbatim "We owe the people the truth about how difficult this summer is going to be. We don't have a power fairy." Debra Bowen (D-Marina del Rey), Senate Energy Committee chairwoman CPUC Must Address Rates In QF Repayment Order - SoCal Ed 03/21/2001 Dow Jones Energy Service (Copyright (c) 2001, Dow Jones & Company, Inc.) LOS ANGELES -(Dow Jones)- Any order from the California Public Utilities Commission requiring utilities to pay small, independent generators going forward must determine how that could be done within the existing rate structure, a spokesman for Edison International (EIX) utility Southern California Edison said Wednesday. The utility was responding to a PUC proposed decision that would require utilities to pay small generators, called qualifying facilities, $79 a megawatt hour within 15 days of electricity delivery. The decision will be voted March 27 by the CPUC. "We're still reviewing (the decision) and should have more to say in a day or two. To the extent that the commission orders us to pay going forward of course we will. But it needs to address how we will pay the QFs," a SoCal Edison spokesman said. SoCal Edison and PG&E Corp. (PCG) unit Pacific Gas & Electric Co. are struggling under nearly $13 billion in uncollected power costs due to an inability to pass high wholesale power costs to customers under a rate freeze. Gov. Gray Davis Tuesday blasted the utilities for not having paid their QF bills in full since December. Pacific Gas & Electric Co. has made some partial payments to QFs, but SoCal Edison has paid nothing. Together, they owe the QFs about $1 billion, but the order doesn't address that debt. An Edison executive said, in reaction to the governor's sharp comments, that the company simply doesn't have the money to pay creditors. "The root problem here is there just isn't enough money in the current rate base to pay our bills," said Edison Senior Vice President of Public Affairs Bob Foster. "We understand the financial distress (the QFs) face; we are facing financial distress ourselves." The proposed PUC order would also require the state's investor-owned utilities to offer the small generators five- and 10-year contracts for power for $79/MWh and $69/MWh, respectively. The QFs "may be able to live with" the PUC proposal, but the five- and 10-year contract prices may be inadequate if natural gas prices at one of the California borders are high, said Jan Smutny-Jones, president of the Independent Energy Producers Association. Natural gas prices into California are currently higher than anywhere in the country. But some say the proposed decision may not be enough to prevent the QFs from filing involuntary bankruptcy proceedings against the utilities for the money they are still owed. "There's still a lot of skepticism. To say our position has changed based on the CPUC decision or the governor's announcement is not accurate. A lot still has to happen," said Jay Lawrence, a spokesman for a renewable creditors committee. -By Jessica Berthold, Dow Jones Newswires; 323-658-3872; jessica.berthold@dowjones.com -0- 22/03/01 01-27G State Says It's Accelerating Plan to Buy Power Utilities' Grid Government: Talks with Edison are reported near completion, but agreement with heavily indebted PG&E has a way to go. RONE TEMPEST; DAN MORAIN TIMES STAFF WRITERS 03/21/2001 Los Angeles Times Home Edition A-22 Copyright 2001 / The Times Mirror Company SACRAMENTO -- As blackouts hit California for a second day Tuesday, a key consultant to Gov. Gray Davis said negotiations to buy the power grid owned by the state's largest utilities "are proceeding at an accelerated pace." Wall Street consultant Joseph Fichera said talks with Southern California Edison could be wrapped up within days, although those with PG&E are much less advanced. The administration and PG&E have not reached even an agreement in principle, he said. PG&E, which has more debt than Edison, says its transmission lines are more extensive than those of its Southern California counterpart. The state wants to buy the utilities' transmission lines and other assets for about $7 billion to provide cash to the utilities, help stabilize the electricity supply and ease the power crunch that has plagued California for months. To research the grid purchase, Fichera said, the state has had to pore over 80,000 documents just to assess the utilities' liabilities. "We are working at a good pace," said Fichera, chief executive of the New York firm Saber Partners. " . . . If we get to a deal-breaker, it might be longer." By making Fichera, who is also a consultant to the Texas Public Utilities Commission, available to reporters Tuesday, the Davis administration was clearly trying to reassure the public that progress is being made on the governor's plan to pull the state out of the crisis. Since mid-January, when the big utilities' credit failed and suppliers stopped selling to them, the state has spent nearly $3 billion buying electricity from a handful of large suppliers in Texas, Oklahoma, Georgia and North Carolina. Not a cent has gone to the hundreds of alternative energy suppliers in California who provide about a quarter of the state's electricity. The Monday and Tuesday blackouts occurred partly because many of the cash-strapped alternative suppliers, including solar, biomass and wind power units, cut their normal supply to the system in half. They say Edison and PG&E have not paid them since November; the utilities say they are out of cash. Assemblyman Fred Keeley (D-Boulder Creek) said the plight of the alternative suppliers has dragged on because of the complexity of dealing with "almost 700 individual contractors." Another delaying factor, said Keeley, who with state Sen. Jim Battin (R-La Quinta) worked for almost three months to come up with a legislative plan to lower the small producers' prices, was "the huge enmity . . . manifested between the utilities and the qualifying facilities. These people just don't like each other." This week's blackouts provided two painful lessons for the Davis administration: * When it comes to electricity, size doesn't matter--every kilowatt counts. During peak use, a small wind power facility in Riverside County can make the difference between full power and blackouts. * There is no such thing as a partial solution. Unless the whole energy equation is balanced, the parts don't work. For the Davis plan to work, several key elements need to come together or utility customers will almost certainly face rate increases above the 19% already set in motion * The cost of power purchased by the state must be reduced through long-term contracts with the big out-of-state producers. These contracts, the details of which the Davis administration has kept confidential, are still being negotiated by Davis consultant Vikram Budhraja of the Pasadena firm Electric Power Group. The administration says it has concluded 40 contracts with generators, about half of which have been signed. According to the most recent statistics released by the Department of Water Resources, which buys power for the state, current prices are still well above the rate state Treasurer Phil Angelides says is necessary for a planned $10-billion bond offering to succeed. The bonds, set for sale in May, will be used to reimburse the state for the money it will have spent by that time to buy electricity. The state is currently spending at a rate of $58 million a day to buy power. If prices stay high, the $10 billion in bonds will not cover the state's power purchases by the end of the summer. Angelides says he cannot proceed with bridge financing for the bonds until the Public Utilities Commission devises a formula to guarantee that a portion of utility bills will be dedicated to bond repayment. Angelides has estimated that, under the January law that put the state in the power buying business, the state must be reimbursed $2.5 billion annually, and that $1.3 billion is needed to service the debt. PUC Administrative Law Judge Joseph R. DeUlloa is expected to announce his ruling on the reimbursement rate later this week, leading to a PUC vote on the matter as early as next week. * The rates charged for electricity by the alternative producers, known as qualifying facilities, must be cut at least in half, down from an average of more than 17 cents per kilowatt-hour. In his news conference Tuesday, Davis said he will ask the PUC to set QF rates at 6.9 cents for 10-year contracts and 7.5 cents for five-year contracts. Meanwhile, PUC Chairman Loretta Lynch, a Davis appointee, said Tuesday that the commission will vote next week on a proposed order requiring Southern California Edison and Pacific Gas & Electric to pay the QFs for electricity in the future. Lynch said a recent PUC assessment showed that the utilities have enough cash on hand for that. "We are trying to make sure the folks providing the power get paid," Lynch said. "The qualified facilities have demonstrated that they haven't been paid and that it is impairing their ability to provide power." The utilities contend that if they pay the small providers what they owe them, there will not be enough money left to pay other creditors. "There is not enough money in the current rate structure to pay the [alternative producers], pay the [Department of Water Resources] and pay the utilities for their generation," said John Nelson, a spokesman for PG&E. * The utilities must sell to the state the power they produce themselves, mainly from hydro and nuclear sources, at a rate only slightly above the cost of producing it. This is tied to the ongoing negotiations between the Davis administration and the utilities to restore the near-bankrupt utilities to solvency. * Times staff writers Julie Tamaki, Miguel Bustillo and Tim Reiterman contributed to this report. Davis OKs Subsidy of Pollution Fees Smog: As part of secret deal to get long-term energy contracts, state would pay for some of the credits that allow excess power plant emissions. Critics renew call for full disclosure. DAN MORAIN TIMES STAFF WRITER 03/21/2001 Los Angeles Times Home Edition A-23 Copyright 2001 / The Times Mirror Company SACRAMENTO -- As part of his closed-door negotiations to buy electricity, Gov. Gray Davis has agreed to relieve some generators from having to pay potentially millions of dollars in fees for emitting pollutants into the air, Davis said Tuesday. Davis announced two weeks ago that his negotiators had reached deals with 20 generators to supply $43 billion worth of power during the next 10 years. However, the Democratic governor has refused to release any of the contracts or detail various terms, contending that release of such information would hamper the state's ability to negotiate deals with other generators and therefore ultimately would raise prices Californians pay for electricity. Sources familiar with the negotiations, speaking on condition of anonymity, said the agreement reached with Dynegy Inc., a power company based in Houston, is one that includes language requiring that the state pay the cost of credits that allow emissions. Dynegy spokesman Steve Stengel declined to discuss the company's deal with the state. "We couldn't get them to sign contracts; it was a sticking point," Davis said of the decision to pay the fees of some generators. "We had to lock down some power so we were not totally dependent on the spot market." The fees in question are part of an emission trading system known as RECLAIM. Under the system, companies are allotted a certain amount of allowable pollution. If their operations pollute more, companies are required to purchase credits on an open market. Currently the credits cost about $45 per pound of pollution--an amount that can lead to a bill of well over $10 million a year for a power plant. The South Coast Air Quality Management District, which regulates pollution in the Los Angeles Basin, is considering steps to significantly lower the cost of the system--a step that could considerably cut the state's potential cost, Davis said. Senate Energy Committee Chairwoman Debra Bowen (D-Marina del Rey) defended the decision to cover the power company's costs. "It is a question of whether it brings down the price of power," she said. "If it brings down the price of power, I don't have a problem with it." Nevertheless, word that the contracts could bind the state to pay pollution fees caused some critics of Davis' policy to renew calls for Davis to reconsider the secrecy surrounding the power negotiations. The payment provision underscores the fact that the contracts involve more than merely the prices the state will pay for its megawatts, the critics note. "The Legislature should have known about it," said Senate President Pro Tem John Burton (D-San Francisco). "It is going to cost taxpayers money. It makes you wonder. . . . This was a policy issue that was never discussed with the Legislature." V. John White, a lobbyist for the Sierra Club, who also represents alternative energy producers, called the contract proposal "a horrible precedent." "Until we know exactly what the state has agreed to and how much of a subsidy this represents, we can't determine how serious the breach of principle this is," White said. Another critic of the secrecy of the negotiations, Terry Francke, general counsel for the California First Amendment Coalition, said the provision in question "raises the possibility that there are other [concessions]" that have not yet come to light. In the summer, when demand for power is highest, some generators probably will exceed pollution limits set by regional air quality management districts. To avert blackouts, state officials might ask the companies to keep plants running. In such cases, some sources familiar with aspects of the contracts said, the contract language could be interpreted to suggest that the state would cover any fines--although Davis said Tuesday the state will not cover the cost of fines. A recent Dynegy filing with the Securities and Exchange Commission underscores the rising cost of pollution-related measures. The company, which is partners with NRG Energy in three California plants in El Segundo, Long Beach and Carlsbad in San Diego County, said its "aggregate expenditures for compliance with laws related to the regulation of discharge of materials into the environment" rose to $14.3 million in 2000, from $3.6 million in 1999. A South Coast Air Quality Management spokesman said Dynegy's facilities appear to be fairly clean--although Sierra Club lobbyist White said Dynegy has been seeking a permit at one of its plants to burn fuel oil, which is dirtier than natural gas. Davis said he intends to "make this information public," but he added that "we do not want to put the public's interest in jeopardy by asking them to pay higher prices." "Nobody likes the notion that [the administration is] not being fully forthcoming," Davis said. "But I also have a corollary responsibility that I don't stick these generators with a higher rate." FERC ORDERS WILLIAMS ENERGY AND AES TO EXPLAIN THEIR REFUSAL TO MAKE CERTAIN RMR UNITS AVAILABLE TO CALIFORNIA ISO LAST YEAR 03/21/2001 Foster Electric Report 5 (c) Copyright 2001, Foster Associates, Inc. Following a preliminary, non-public investigation, FERC directed AES Southland Inc. and Williams Energy Marketing & Trading Co. (IN01-3) on March 14 to show cause why they did not violate section 205 of the Federal Power Act (FPA) by failing to provide power to the California ISO from two reliability must-run (RMR) generator units during a period in April and May 2000. The investigation responded to a matter referred by the Cal-ISO. If a violation is found, Williams Energy and AES could be required to refund excess profits of $10.9 million (as calculated by FERC) and face restrictions on their market-based rate authority for a year. The show cause order involves two generation units (Alamitos 4 and Huntington Beach 2), owned and operated by AES. Williams Energy markets all output from the Alamitos and Huntington Beach plants, including the two units at issue here, pursuant to a tolling agreement filed with the Commission. The Cal-ISO designated the two units as RMR units that it could call on when necessary to provide energy and ancillary service essential to the reliability of the California transmission network. The Cal-ISO makes both a fixed payment to the RMR owner or operator to compensate for the RMR unit's availability and a variable payment for the RMR unit's output (if the unit is not otherwise participating in the market). Williams Energy and the Cal-ISO executed RMR agreements, filed as rate schedules with the Commission, allowing the Cal-ISO to dispatch units "solely for purposes of meeting local reliability needs or managing intra-zonal congestion." The ISO may dispatch a non-RMR unit if the designated RMR unit is not available. Under its RMR agreement with the ISO, Williams is paid the greater of its contract price or marginal cost for operating RMR units. However, if a non-RMR unit has to be dispatched because a designated RMR unit is unavailable, Williams will be paid its bid price, not the RMR contract price. During the April to May 2000 period, the Cal-ISO sought to dispatch both Alamitos 4 and Huntington Beach 2 as RMR units to provide voltage support. However, according to the FERC order, Williams Energy refused to make Alamitos 4 available from April 25 through May 5, and to make Huntington Beach 2 available from May 6 through May 11, "for reasons not directly related to the necessary and timely maintenance of the units." Consequently, the Cal-ISO was forced to dispatch non-RMR units at a higher cost, namely, Williams Energy's bid price for service provided by the replacement units. By contrast, if the RMR units had not experienced outages and been available from April 25 through May 11, Williams Energy would have received either (1) the market revenues only from the respective units, which would have resulted in no payments for RMR output from the ISO to Williams Energy, or (2) Williams Energy's variable cost for operating the RMR units less the market revenues from the respective units' output. Accordingly, FERC observed, Williams Energy had "a financial incentive to prolong any outages of Alamitos 4 and Huntington Beach 2 in April and May 2000." The bid price for the non-RMR units was at or near the Cal-ISO's then-effective bid cap of $750/MWh, FERC continued. Therefore, Williams Energy received payments from the Cal-ISO of more than $11.3 million, or about $10.3 million greater than the estimated average variable operating cost of the non-RMR units (approximately $63/MWh) during the period in question. This indicates a refund amount, including interest, of nearly $10.9 million. The information in this order and a non-public appendix, the Commission declared, suggests that AES declared outages at the two RMR units and maintained Huntington Beach 2 in a manner inconsistent with good utility practice, and that Williams Energy took action to extend the outage at Alamitos 4 and to make Huntington Beach 2 unavailable for "pretextual reasons." Based on this information coupled with Williams Energy's financial incentive not to make the Alamitos 4 and Huntington Beach 2 units available, FERC found serious questions about whether (1) AES and Williams Energy violated applicable RMR contracts and tariffs on file with the Commission pursuant to FPA section 205 when they refused to make Alamitos 4 and Huntington Beach 2 available for dispatch by the Cal-ISO; (2) whether Williams acted inconsistently with its market-based rate authority and the market monitoring information protocols of the Cal-ISO's tariff regarding the unavailability of the RMR units during the period at issue; and (3) whether AES violated a tolling agreement on file with the Commission pursuant to section 205. The Commission identified two remedies for these potential violations: a refund by Williams Energy and/or AES of revenues received greater than the amount that would have collected from the ISO if the RMR units had been available, and a condition on Williams Energy's market-based rate authority. Specifically, for a one-year period, if an RMR unit were not available when dispatched by the Cal-ISO, a non-RMR unit dispatched in its place would only receive payment according to the terms of the applicable RMR contract. In other words, Williams Energy would not receive the bid price for operation of the substitute, non- RMR unit. The Commission directed Williams Energy and AES to show cause, within 20 days, why they should not be found to have committed the above-described violations and why the specified remedies should not be imposed. Further, to ensure procurement of all relevant information, the Commission instituted a formal, non-public investigation into the operation, maintenance and sales of power from the Alamitos and Huntington Beach plants in 2000 and 2001. Calif Consumers Failing To Conserve Pwr Despite Blackouts 03/20/2001 Dow Jones Energy Service (Copyright (c) 2001, Dow Jones & Company, Inc.) LOS ANGELES -(Dow Jones)- California consumers haven't been conserving enough electricity to relieve strain on the power grid and reduce demand in the state, a spokesman with the Independent System Operator said Tuesday. The ISO said that despite two straight days of statewide rolling blackouts, consumers aren't using less electricity, which means additional megawatts will be taken off the grid. As a result, blackouts could last longer and impact additional communities, the ISO said. ISO spokesman Pat Dorinson said Monday "conservation in California is no longer an option," but consumers in the state aren't heeding the call to reduce consumption. Conservation efforts during rolling blackouts Monday and Tuesday were far less than Jan. 17 and Jan. 18, when blackouts swept through Northern California due to transmission constraints. Jim Detmers, the ISO's vice president of operation, said consumers saved the state about 1,000 megawatts of electricity, enough power for 1 million houses. The ISO said conservation efforts Monday were about 500 MW or less. "We would be very happy if we saw the same amount this time," Detmers said. The state's Energy Commission said consumers think it's no longer important to save electricity until blackouts are imposed. "People have been saving generally, but it isn't a big bump from hour to hour," a spokesman for the Energy Commission said. Gov. Gray Davis launched a massive conservation campaign this month, promising consumers a rebate on their summer electricity bill if they save at least 20% of electricity, compared with last summer. The governor said he believes conservation this summer will amount to possibly saving 5,000 MW and averting the chance of rolling blackouts. -By Jason Leopold; Dow Jones Newswires; 323-658-3874; jason.leopold@dowjones.com Gas Co.'s Success Opens Debate Southern California energy supplier has reaped millions of dollars in state incentives for keeping down its costs. Though consumers get a share of the windfall, regulators are asking whether they should get more of the bonus, which is expected to be huge this year, as a form of price relief. The natural gas provider says it deserves to keep its reward. TIM REITERMAN TIMES STAFF WRITER 03/18/2001 Los Angeles Times Home Edition C-1 Copyright 2001 / The Times Mirror Company SAN FRANCISCO -- While consumers suffer soaring energy bills and the big electric utilities lurch toward insolvency, the news is not all dire at Southern California Gas Co. Through vigorous deal making, the Sempra Energy subsidiary has consistently beaten the volatile natural gas market during the last year, and the company stands to reap millions of dollars in savings through a state incentive program that rewards utilities for keeping costs down. For several years, the utility has been splitting the savings 50-50 with ratepayers whenever the company's gas costs fall slightly below market levels. Those savings, Gas Co. executives acknowledged, have shot to unprecedented heights during the state's power crisis. Now, in this climate of high consumer gas bills and runaway market prices, regulators are taking another look at the program. The question before the Public Utilities Commission: Should Gas Co. ratepayers, who endured huge bill increases this winter, get a bigger share of the savings? The total windfall under the incentive program has in some years exceeded $20 million. But the amount for the last 12 months is expected to multiply many times over, company executives said, partly because the Gas Co. has done so well in the wild market by selling, lending and trading gas as well as buying it. "The recent market conditions . . . could possibly result in some unintended consequences that result in shared savings of benefits that may be more appropriately allocated entirely to ratepayers," the PUC's consumer protection arm, the Office of Ratepayer Advocates, reported Oct. 30, even before the latest upward market spirals. Gas Co. representatives express frustration, saying they have done what the state has requested under its gas-cost incentive program: Buy smarter, and pass the savings along to its 5 million residential and small-business customers. The company contends it has worked hard to keep bills down and should be rewarded for taking risks to obtain gas at the lowest possible cost. "The PUC, every time we do well, raises the bar on us," said Jim Harrigan, director of gas acquisition. "I don't necessarily agree with it." By virtue of its purchasing power and storage and pipeline capacity, the Gas Co. has become a big player in the regional natural gas market. In the company's bustling trading room at its Los Angeles headquarters, 15 employees track price movements, pipeline supplies and even the weather via computer, while cutting deals and arranging gas shipments. Although the Gas Co. buys the commodity for its customers, the company also sells to marketers, other utilities and producers. State officials say the number of transactions by the company has risen steeply to 10,000 to 20,000 a year, including gas sales along California's border, where prices have rocketed. The PUC created the cost incentive program for the state's three major gas utilities--San Diego Gas & Electric Co. in 1993, Southern California Gas the next year and PG&E Corp.'s Pacific Gas & Electric Co. in 1997. Like Southern California Gas, SDG&E is a subsidiary of Sempra Energy. The program was designed to give utilities added motivation for obtaining gas at the best price for customers. It replaced lengthy and contentious reviews by the PUC, which assessed whether utilities had purchased gas at reasonable prices and sometimes ordered them to return millions of dollars to customers. An annual audit of the Gas Co. program and a staff evaluation requested by the PUC recently concluded that the program has achieved many of its goals, but it also proposed adjustments that would give customers a greater share of the rewards. "These incentives were designed in less volatile times," said program supervisor Mark Pocta of the Office of Ratepayer Advocates, which conducted the audit. "There is a question of how much should go to ratepayers and shareholders." His office also plans to assess whether the Gas Co.'s trading had any negative effects on the gas market, resulting in diminished supplies or higher prices for other utilities and their customers. Under the program, the Gas Co. shares risks and rewards with its ratepayers, but since the program was launched, it has consistently produced awards. If the cost of gas is 0.5% or more below a benchmark based on monthly gas market indexes, the company and its customers split the savings 50-50. California's gas utilities are not allowed to profit on their raw commodity costs; they merely pass along those costs to ratepayers with no markup. The savings under the incentive program are automatically reflected in consumers' monthly gas bills but are not itemized. At the end of the year, the utilities request their share of the savings, and the PUC has routinely granted approval. Then the companies, and thus their shareholders, are paid through customer utility bills. The resulting bill increases typically have been modest, less than 1%. But as the awards increase, regulators say, the effect on customers will become more significant unless the present structure is changed. "There's no question, when you start to talk about $100 million [or more in savings], and add [the company's award] into rates in a year, it will make a noticeable difference," said Los Angeles economist Jeff Leitzinger, president of Econ One, who has done consulting for the Gas Co. Still, he said, ratepayers should bear in mind that they already benefit from below-market gas and transportation costs. In the early years of the program, records show, the Gas Co.'s awards went from zero to $3.2 million, $10.6 million, $2 million and $7.7 million. Last year's award of $9.8 million is awaiting PUC approval. This year's proposed award, covering the period through the end of this month, has not yet been submitted by the Gas Co. But the utility has provided monthly figures and oral updates on a confidential basis to PUC officials, who declined to provide figures. Harrigan of the Gas Co. said the savings are expected to multiply "many times over," largely because the company was well-equipped for the market fluctuations and tried to insulate its customers from high gas prices. "Any trading company, especially one with assets like we have, has benefited from volatility in the market," he said. Harrigan said, however, that he does not believe the company's level of activity has adversely affected the market and that its trading pales in volume to that of unregulated energy companies. Anne Smith, the Gas Co.'s vice president of customer service and marketing, said the utility will not release figures for this year's incentive program until they are filed with the PUC in June. "I don't want to interrupt that process," Smith said, noting that the PUC ultimately will determine the company's award. "I think they need to focus on what [the Gas Co.] has done for the ratepayers. It has been immense." Although the typical monthly gas bill has risen to $80 from $50 a year ago, Gas Co. customers tend to have lower rates than those of other California utilities. The company's gas procurement cost in February was 66 cents per therm, or 100 cubic feet. That's more than twice last year's cost but only about half what sister company SDG&E paid for its 740,000 customers in February. It's also much lower than the $1.09 per therm PG&E pays. "We were as upset about the overall [gas price] increase as anyone else," Harrigan said. "I would rather see the prices of a year ago, even though we managed to do a little better in the [recent] environment." When it comes to keeping down costs, regulators say, the Gas Co. has advantages over other utilities in the marketplace. For one, the company has so much pipeline capacity at major gas basins that it purchases a relatively small portion of its needs--about 10% to 15%--at the California border, where prices in December briefly rose to the equivalent of $6 per therm, or 20 times those a year earlier. This presents opportunities. "At the beginning of the month, they forecast a certain amount of gas they have to buy," said Pocta of the Office of Ratepayer Advocates. "If they go out and buy and do not need to use as much because the weather is more moderate than expected, they can either inject the gas into storage or they can make sales at the border." With gas price run-ups like those seen in the last year, Pocta said, "there is a question: Should that benefit be shared, or flow entirely to ratepayers?" Customers, he pointed out, may be entitled to additional benefits because they pay for the interstate and intrastate pipeline capacity and the gas storage that give the company the flexibility to make advantageous deals. "By the same token, we want [the Gas Co.] . . . to go into the market and generate cost savings that can be passed on to the customers," he added. "We want them to have incentives. The question is how to balance them." Under deregulation, the Gas Co. adopted the nontraditional role of marketer, according to a PUC Energy Division report in January. The company makes gas sales at various locations. It engages in exchanges. It makes futures transactions to help stabilize costs. "They look for ways to lower the gas cost," said Richard Myers, program supervisor at the Energy Division. "Before they were lots more risk-averse. Now they feel they can take risks and make money for shareholders, and it is a benefit for ratepayers at the same time." The incentive programs are tailored to individual utilities, so it is difficult to compare them. Records show that the shared savings at SDG&E, a much smaller utility, declined steadily from $9.2 million in the 1996-97 cycle to $560,000 in 1999-2000. Spokesman Ed Van Herik said the falloff largely represents a drop in gas purchases, especially as the company sold off its own gas-fired electricity-generating plants. He said the company does not yet know how much savings have accrued in the last year. In an annual report to the PUC in February, PG&E said it had no savings under the incentive program and thus it is not entitled to any award for the 1999-2000 cycle. The Utility Reform Network, a San Francisco-based consumer advocacy group, said it will closely watch the PUC's evaluation of the incentive program at the Gas Co. "We want to make sure, given the dramatic changes in the gas market and prices, ratepayers are not left out of the [additional] benefits," TURN attorney Marcel Hawiger said. "We'll look to see whether the mechanism should be changed." Severin Borenstein, director of the Energy Institute at UC Berkeley, said the program should be changed to provide more incentive for utilities to enter long-term contracts that would smooth out volatility in the market. "Unfortunately, under the system," he said, "the only incentive is to beat the [spot] market." Use this file to download and print all the articles in this section (See attached file: Dow Jones Interactive-california-03233001-selected.doc) IMPLICATIONS FOR OTHER MARKETS (For easier printing of all the articles in this section use the file at the end of the section) New York: New York at the crossroads Wednesday, March 21, 2001 Energy Insight (Embedded image moved to file: pic24389.pcx) By Dave Todd dtodd@ftenergy.com U.S. Energy Secretary Spencer Abraham declared this week that the Big Apple is on the verge of being bitten hard by power cuts and rising energy prices. Delivering the keynote address at the U.S. Chamber of Commerce's national energy summit in Washington Monday, Abraham said, "California is not the only state facing a mismatch between supply and demand," what with "electricity shortages predicted for New York City and Long Island this summer" and low capacity margins threatening electricity reliability elsewhere across the country. But how likely is it that New Yorkers will face blackouts of the sort confronting Californians? Not very, says energy trade specialist Edward Krapels, managing director of Boston-based METIS Trading Advisors. Krapels, a consultant helping major Northeastern utilities, such as Consolidated Edison, design market-hedging programs, adamantly decried what he said are facile comparisons between conditions in New York and California, there being "more differences than there are similarities" between those two industrial cornerstones of the country's economy in respect to energy security management. "First of all, New York has a more varied portfolio of energy generation sources than California," he said. California has hydro, nuclear and gas, but when it lost a lot of hydro, the state needed gas to pick up the slack, and the "capacity just wasn't there." In New York's case, the state has oil and coal still in the mix and its overall dependence on gas is much lower than California's, Krapels added. New York avoids making same mistakes Portfolio diversity is one pillar of any effective plan to help New York avoid the same errors made in redesigning California's marketplace. New York's Independent System Operator (ISO), in a new report warning that the state is at an "energy crossroads" in terms of its capacity adequacy in the immediate future, argues that a concerted effort is required to arrest declining in-state generation capacity reserve margins, and a strategy must be put in place, whether or not new generation comes on-line, in accordance with current anticipated scenarios. A measure of New York's essential difficulty is that, between 1995 and 2000, statewide demand for electricity grew 2,700 MW, while generating capacity expanded by only 1,060 MW. With no major new generating plants in downstate New York fully approved, the gap is expected to continue to widen. To avoid "a replication of California's market meltdown" the New York ISO calculates the state's daily generating capacity needs to grow by 8,600 MW by 2005, with more than half of that located in New York City and on Long Island. Expressing concern this may be too big a burden for the current bureaucratic process to bear, the ISO wants to see a state-appointed ombudsman named to help would-be merchant power plant investors plow through red tape. "Increasing New York's generating capacity will also lessen the state's escalating and risky reliance on out-of-state sources of electricity," the ISO added. "Since 1999, New York State has been unable to cover its reserve requirements from in-state sources." Not everyone agrees with that analysis, insofar as it argues for circling the wagons inward. Some analysts believe the ultimate solution lies not in tying in more inwardly dedicated power, but in expanding the marketplace by breaking down inter-jurisdictional barriers. In any case, New York energy regulatory authorities and those responsible elsewhere in the U.S. Northeast, such as PJM (Pennsylvania-New Jersey-Maryland) Interconnection and the New England Power Pool, are in vastly better shape in terms of "cross-border" cooperation than California and its neighbors in that efforts are being made among various authorities toward developing an integrated regional electricity market. In California, by contrast, the state's focus?for example, in the case of new gas-fired power plant development?has been to ensure dedicated supply to the California market alone, rather than on a regional marketplace. (Embedded image moved to file: pic05075.pcx) The New York ISO's new broad-based analysis of market-restructuring needs argues that the relatively stronger health of its reformed environment is "due in large part to the ability of New York's utilities to enter into long-term power contracts." What needs to be done most, it says, is to move aggressively to build some of the more than 29,000 MW of "proposed new generation in the siting pipeline." In the meantime, the 30,200 MW of electricity New Yorkers used on a peak day last summer shouldn't be eclipsed on too many days this coming summer (given early long-range weather forecasts). Demand, however, is expected to increase at an annual average rate of up to 1.4%. So while New York City, the rest of the state and adjacent parts might breathe easy this year, it could be a brief rest from the fray. Meanwhile, a 4% shortfall is still being planned for this summer that is not yet provided for, as authorities hurriedly seek to arrange new generation plants around Manhattan, on Long Island and even on barges offshore. One way or another, whether it is the weather or the politics of siting new energy facilities, it's going to be a hot time in the city. Long-term solutions hit brick wall Meanwhile, attempts at longer-term solutions continue to run into trouble. Last week, Connecticut state regulators came out against a proposal to run a new underwater cable under Long Island Sound that Hydro-Quebec subsidiary TransEnergie U.S. Ltd. wants to build to pump more juice into Long Island Power Authority's load pocket. Despite strong promises from TransEnergie to be diligent in avoiding damage to oyster beds in Long Island Sound, the proposal failed to convince authorities, who were persuaded the pipeline project could lead to diversion of electricity from Connecticut. In similar fashion, private companies wanting to build 10 small independent power plants and temporary generators offshore New York City are running into intense opposition from environmental groups and citizen orga nizations?some of whom have taken their cases to the state assembly in Albany. The David vs. Goliath nature of such controversies has further alerted energy companies to the difficulties of addressing complex energy supply issues that may ultimately devolve to people not wanting things in their backyard, regardless of what the alternative might mean to their fellow citizens or the greater public good. But suddenly, in New York, California's troubles?while still distant in their intensity? may not be so far away. By some estimates, this summer's bills for Consolidated Edison customers could be up as much as one third or more over last year's charges. Letting the time slip when it comes to building new infrastructure isn't going to make the pain go away. NEW YORK: NY-ISO REPORT SAYS STATE NEEDS 4,000 - 5,000 MW OF NEW GENERATION SOON TO AVOID SEVERE SHORTAGES; NY-ISO ALSO ASKS FERC TO EXTEND BID CAP AND TEMPORARY EMERGENCY PROCEDURES 03/21/2001 Foster Electric Report 2 (c) Copyright 2001, Foster Associates, Inc. Raising the specter of an East Coast version of the California crisis, the New York Independent System Operator, Inc. (NY-ISO) is warning of serious electricity shortages, air quality deterioration and stunted economic growth without immediate approval of between 4,000-5,000 MW of new generating capacity in the state. Of this amount, 2,000-3,000 MW is needed to serve New York City. Another 8,600 MW of new capacity will have to be built by 2005, the NY-ISO said in a recent report, Power Alert: New York's Energy Crossroads. "New York is heading towards a very serious situation unless it acts immediately to get new supply sited within its borders," said NY-ISO president William Museler in a statement accompanying the report. "This report is essentially a caution light at New York's energy crossroads." Sources in the New York Public Service Commission have downplayed the NY-ISO's warning, asserting that a process for bringing on new generation is well underway, with more than 85 projects in the approval pipeline. In a related development, the NY-ISO asked FERC to approve a proposed tariff amendment (ER01-1517) extending existing bids caps in some of its markets until 10/31/02, and a separate and related amendment (ER01-1489) extending the NY-ISO's so-called temporary extraordinary procedures (TEP) that allow the ISO to make price adjustments and take other corrective actions if it finds evidence of market power abuse. The NY-ISO Report --The NY-ISO likened the situation in New York to that faced by California, where a relentless increase in demand has not been met with an equal increase in supply. The NY-ISO said that between 1995 and 2000, statewide demand for electricity rose by 2,700 MW, while generating capacity increased by only 1,060 MW. With no major new generating plants in downstate New York fully approved for construction at this time and generation demand in the state expected to grow around 1.3 percent annually for the next several years, the NY-ISO said this gap will continue to widen. The inevitable result of this trend is large rate increases for New York's power consumers. The NY-ISO's modeling suggests that "by 2005, statewide prices are likely to be more than 20-25 percent lower in the case in which new plants are built than in the case where they are not." In New York City, "the price to consumers of electric power could be reduced by as much as 28 percent when compared to the case of no new supply or load management programs." Besides large rate increases, the NY-ISO asserted that a failure to site and build new plants in New York will threaten power reliability in the state and lead to increasing reliance on out-of-state resources. The report said that if no new in-state generation comes on line in the next five years, the state's generation reserve margins will shrink from the current 14.9 percent above peak demand "to a dangerously low 8.4 percent by 2005." Pointing to California's situation, the report added that increased reliance on power imports "can subject electrical suppliers and customers in New York to transmission restrictions and political and economic considerations beyond the control or influence of responsible New York State entities." To avoid these harsh consequences, the NY-ISO said New York's new siting law, known as the Article X process, needs to be modified. Since the law was passed 18 months ago, the report noted that only two plants have been approved (both upstate) and neither has yet been built. The problem, according to the NY-ISO, is that the siting process "requires the cooperation of multiple state agencies." To expedite the process, the report suggested the "clear designation of a lead agency and the adoption of an `ombudsman program' to expedite and coordinate the work of the agencies responsible for the Article X process must be made." The NY-ISO added that an expedited approval process would improve the environment because older, more polluting power plants would be replaced by cleaner gas-fired units. On a more positive note, the NY-ISO reported that New York's restructured power market "is far healthier than that in California, due in large part to the ability of New York `s utilities to enter long-term power contracts. The basic structure of the New York market will also reduce unwarranted price spikes and other market disruptions through mitigation programs which automatically correct price spikes due to market power abuses." "Nevertheless, California `s experience raises a caution flag for all New Yorkers," the report continued. "The deregulated market in New York cannot achieve lower costs through competition without an increase in generating capacity similar in magnitude to the recommendations of this report, along with simultaneous efforts to institute greater conservation, better load management and alternative energy supply initiatives. Additionally, closer integration with regional suppliers of power is both inevitable and beneficial." The report also recommended (1) accelerating conservation, real-time metering and price-sensitive load programs; and (2) upgrading the state's and the Northeast's transmission infrastructure. The Proposed Tariff Amendments -- New York's Article X siting process and continuing tight supplies were also cited in the NY-ISO's request to extend from 4/30/01 until 10/31/02 its $1,000/MWh bid caps. FERC first approved the 1,000/MWh bid caps in July 2000 (see REPORT No.197, pg.6), and subsequently extended them. The NY-ISO's board "is sensitive to the Commission's concerns about undue intervention in energy markets," the filing related. "Nevertheless, the NY-ISO is submitting this request because it believes that delays in New York state's `Article X' process for licensing and siting new generating capacity is inhibiting supply from increasing to match continued demand growth. . . . Moreover, although the NY-ISO proposes to implement several demand-side measures this summer, it is not yet clear whether they will make demand sufficiently price-responsive to avoid periods of high prices that would not occur if there were an efficient demand-side response." Thus, the NY-ISO insisted that the requested extension is needed to provide more time for the development of additional generation and to gauge the effectiveness of the NY-ISO's proposed demand-side response mechanisms "in order to avoid exposing consumers to price spikes that are not a product of the interplay of competitive market forces." Other problems cited in the NY-ISO's filing which keep New York's power market from being fully competitive include continuing capacity and operating constraints at the state's Central-East interface, and questions over adequate gas supply. "The NY-ISO remains acutely aware that taking steps to deal with price abnormalities can have undesirable consequences," the filing continued. "Nevertheless, the NY-ISO believes that the $1,000/MWh cap that has been used in the PJM's markets since inception does not appear to have had an adverse impact there. . . . The permanent bid caps in PJM, and the interim bid caps in ISO New England (proposed for extension through the end of 2001) also make continuation of the NY-ISO's bid caps more important in order to maintain uniformity across the Northeastern markets. The NY-ISO also continues to believe that suppliers will not be materially harmed by the continuation of bid caps, which are likely to come into effect very rarely and are set at levels that prevent only artificially high run-ups in prices." The NY-ISO's request to extend its TEP procedures (which also were previously extended) through 10/31/02 cited similar problems with New York's power markets, but claimed that the NY-ISO "has made great strides" toward eliminating market design and software flaws. "The TEPs were, and remain, an indispensable tool for responding to and correcting market flaws and other instances where the markets are not operating as the NY-ISO and the Commission intended," the filing insisted. MASSACHUSETTS: Attorney general says summer poses electricity concerns By JOHN McELHENNY Associated Press Writer 03/19/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. BOSTON (AP) - The state's top consumer advocate warned that Massachusetts may see "California-type" electricity blackouts this summer when temperatures rise and residents turn on air conditioners and fans. "It would be a mistake to feel this is a cold weather problem," said Attorney General Thomas Reilly in an interview with The Associated Press. "Our major problem will come this summer." State deregulation of the electric industry has been among the factors blamed for local power outages in California, and on Monday, California for the first time suffered rolling blackouts across the entire state. Massachusetts relaxed regulations on its own electric industry in 1998 to attract more companies to stir competition. But that hasn't happened yet, largely because the current high cost of oil and gas make it expensive to produce electricity. "The promise of deregulation was that there was going to be competition," said Reilly, a Democrat. "That competition in the wholesale market is not happening." Hot summer weather drives up electricity use as residents turn on air conditioners and fans, and Reilly said a few particularly hot days could strain the grid that provides the region's power. A spokeswoman for the region's power grid said electricity use is expected to rise 1.5 to 2 percent this year, but the region should have enough power because of six new power plants that have begun generating electricity in the past 18 months. "The situation is unlike California because we have new generation coming on line that is outpacing demand," said Ellen Foley, spokeswoman for ISO New England Inc., which manages the grid of 330 generators connected by 8,000 miles of high voltage transmission lines. Still, a particularly hot day and an unforeseen power generation breakdown could prompt ISO to ask residents to conserve electricity, a situation that arose once last summer, Foley said. In order to avoid any power outages and protect consumers, Reilly repeated calls for electric companies to build more power lines and to offer more options for new customers who have signed up since deregulation. Those customers typically pay more than long-term customers. Electric transmission companies should also be allowed to enter into two-year contracts with suppliers, instead of the six-month contracts many have now, to avoid short-term price spikes for consumers, Reilly said. The Attorney General's Office acts as an advocate for consumers. Michael Monahan, a spokesman for NSTAR, which provides electricity to more than 1 million customers, is upgrading some of its power lines and last year built a new line to Cape Cod, but currently has no lines under construction. "I wholeheartedly concur with the attorney general that it's something we have to focus on," Monahan said, but he added, "The indications I see are that we have an ample supply of electricity." California's statewide outages were ordered on Monday after a transformer fire, high demand and a lack of electricity imports pushed power reserves to near zero. California partially deregulated its electric industry in 1996, two years before Massachusetts. --- On the Net: Attorney General's Office: http://www.ago.state.ma.us NSTAR: http://www.nstaronline.com ISO New England Inc.: http://www.iso-ne.com NEVADA: Discussion of bill stopping power plant sales to continue Wednesday By JOHN WILKERSON Associated Press Writer 03/19/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. CARSON CITY, Nev. (AP) - Lawmakers hit more delays Monday in trying to pass a measure that pulls the plug on the sale of Nevada power plants to avoid California-style energy problems. "The goal of this bill is only stopping the divestiture of power plants and making sure it's constitutional," said Senate Commerce and Labor Chairman Randolph Townsend, R-Reno. "And that's not as easy as it sounds." Townsend's comment just before his committee began working on SB253 was prophetic - witnesses kept bringing up the need for more flexibility in the measure. Translation: Don't kill all deals by stopping Reno-based Sierra Pacific Power and Las Vegas-based Nevada Power from selling their Nevada power plants until June 2003 - and possibly until 2006. Pete Ernaut, a lobbyist for Reliant Energy which has been trying to buy a power plant, said unforeseen market changes could make a plant sale before 2003 a deal that would be in the public's interest. "If you put a two-year moratorium on these plants, all these deals are going to go away," he said. "When the cow leaves the barn, it's difficult to catch." Townsend had hoped to wrap up committee work on SB253 on Monday. Now it's up for review again Wednesday in the Commerce and Labor Committee. Reliant isn't the only company trying to keep power plant purchases alive. Earlier this month, executives of Pinnacle West Energy told the committee that it's in the public's interest to allow Sierra Pacific Resources to sell its Harry Allen power plant. The Harry Allen plant produces about 72 megawatts out of the 2,900 megawatts of energy that Nevada utilities generate. Pinnacle has plans to expand that to 700 megawatts by 2004. Other provisions not strictly related to the plant divestitures, such as ways in which Sierra Pacific and Nevada Power can recover the cost of undoing the sales contracts, don't have to be included in SB253, Townsend said. Townsend said the other concerns dealing with the energy crisis and utility deregulation can be handled in later bills - but the power plant sale issue must be handled now. Nevada's PUC and the Federal Energy Regulatory Commission had directed Sierra Pacific and Nevada Power to sell the plants as a condition of the companies' merger in 1999 under the parent company Sierra Pacific Resources. Critics of the plant sales say the plants generate about half the state's electricity - and if they're sold, the unregulated new owners could sell the power to other states and put Nevada into the energy dilemma California faces of shrinking supply and rising prices. The Southern Nevada Water Authority has presented an analysis stating that rate payers will save from $1.7 billion to $3.5 billion by July 2001 if the power plant sales are stopped. Nevada's Consumer Advocate's Office previously had projected a conservative estimate of $915 million in savings. MAINE: Panel of experts would review impact of energy deregulation By GLENN ADAMS Associated Press Writer 03/19/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. AUGUSTA, Maine (AP) - In the wake of rolling blackouts in California and rate spikes in their home state, Maine's top legislators proposed a study Monday into the effects of deregulation of the energy industry. "Deregulation of electricity is a new idea and we still have a lot to learn," Senate President Michael Michaud said as he called for the analysis. A panel of industry insiders, elected officials and consumers would study issues such as what standard rate consumers can expect and the likelihood of energy shortfalls over the next three years, and whether Maine consumers are vulnerable to anti-competitive activities. In addition, the Blue Ribbon Commission would look into whether changes in Maine's deregulation law are needed to encourage more generating capacity, improve conservation and spur competition. The study is being proposed as consumers remain mindful of a power crisis in California that resulted from high wholesale energy costs, a consumer rate cap and too few power plants in that deregulated state. Maine's deregulation law is designed to avoid such pitfalls, said Rep. William Savage, D-Buxton, House chairman of the Legislature's Utilities Committee. Maine's law does not cap consumer prices, as California's does, and the state has more than enough generating facilities to meet the state's energy needs, Savage said. Since Maine's deregulation law took effect in March 2000, Bangor Hydro-Electric Co. rates have increased 19 percent. The Public Utilities Commission approved a residential standard rate increase as recently as last month. Federal energy regulators are reviewing their decision to allow steep fee increases for utilities and power wholesalers that fail to arrange enough capacity to meet customers' peak load. Gov. Angus King and all four members of Maine's congressional delegation oppose the hike. The PUC has approved standard rate increases for energy delivered by Central Maine Power Co. to medium-sized and large industrial users. On the other hand, some towns and school districts are saving money on energy through deals they can get in the deregulated market. In the meantime, legislation has been introduced in response to some of the changes that have occurred in Maine's deregulated energy industry. One would use some of the money from the sale of power-generating assets to offset an increase in rates paid by large industrial users, said Sen. Norman Ferguson, R-Hanover, Senate chairman of the Utilities Committee. Supporters of the utility study that was proposed Monday said they are not looking to make changes in Maine's deregulation law, but if it needs fixing it could be done during next year's session. The lawmakers' primary interest is to find out how trends in a new environment designed to encourage competition will affect consumers, and to try to identify what consumers can expect in the few years ahead. House Speaker Michael Saxl, D-Portland, said the Legislature "has a fundamental public policy interest in making sure rate-payers and businesses are protected against exorbitant rate hikes." Michaud, D-East Millinocket, said he's interested in finding out how future changes in electric prices and availability might affect businesses and consumers in northern Maine. "The economy in my part of the state is the most vulnerable, and I want to make certain we are leaving no stone unturned in our effort to prevent any shocks to the economy in northern, western and eastern Maine," Michaud added. The commission would include House and Senate members from each party, a utility executive, and representatives of energy producers, providers, a large commercial consumer and individual consumers. OREGON: State Senate moves to combat energy crisis 03/16/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. SALEM, Ore. (AP) - In an attempt to avoid a California-like energy crisis, the Oregon Senate approved a bill Friday that would quicken the process of siting power plants that use gas and renewable resources. "It's important for Oregon. It makes sure that energy will be available to everyone," said Sen. Lee Beyer, D-Springfield. The measure, SB843, would shorten the siting process for power plants that use gas and renewable resources, like wind, from a year and a half to a matter of months. The speeded-up process would be in effect for two years. "If we can act now, we can actually start to solve power supply problems by this summer," said Sen. Jason Atkinson, R-Jacksonville California's strict regulations on the construction of new power plants has contributed to its current shortage and legislators took note. Beyer said though California was definitely a wake-up call, the measure is a reaction to the larger power picture in the Northwest. With low rainfall, hydroelectric generators will have trouble meeting demand, Beyer said. Gas-fired and wind plants could come online as soon as this fall and would provide relief. "We are not in a position to sit back and do nothing about the energy crisis the Northwest and the country are experiencing," said Senate Minority Leader Kate Brown, D-Portland. Conservationists, however, caution that lawmakers should be careful not to rush to provide power at the expense of environmental standards. WISCONSIN: Two utilities to add 975 megawatts in plan to avoid energy crisis By The Associated Press 03/22/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. Plans of two state utilities to add 975 megawatts to Wisconsin's electric power grid as a way of avoiding an energy crisis similar to California's were questioned Thursday by a consumer advocate who said too many power plants may be in the works. "Certainly nobody wants to see blackouts like you have in California but there is the danger Wisconsin could be overbuilding," said Steve Hiniker, executive director of the Citizens' Utility Board, which represents consumer interests in utility rate cases. He noted that plant construction costs ultimately are born by the utility customers. Alliant Energy Corp. announced its proposal Wednesday - in a filing with the state Public Service Commission - to spend $1 billion to build one coal and two gas-fired power plants. Alliant has proposed building a 500 megawatt coal-fired plant and a 100 megawatt natural-gas fired plant by 2006. It also wants to build a 200 megawatt natural gas-fired facility in 2011. Wisconsin has not built a coal-fired plant in more than two decades. Alliant has not determined the plants' locations. Also, Madison Gas & Electric, the state's smallest investor-owned utility, said Wednesday that it had signed deals to buy 175 megawatts of power from three generating plants in Wisconsin and Illinois. "Three out of the four past summers, we've had public appeals for conservation due to shortages somewhere in the state. We need to take steps to avoid that, and the California situation makes that even more clear," said Alliant spokesman Chris Schoenherr. "Getting more iron in the ground will give us more flexibility in the state to be able to react." Alliant acknowledged the new plants will probably mean rate increases, but it was too early to say how much rates would go up. California's problems, which this week resulted in the first deliberate blackouts since World War II, stemmed from underestimating the state's power needs, forcing utilities to sell their power plants but not allowing them to secure long-term supply contracts, and freezing rates, among other things. But Wisconsin's situation is far different. The state has moved slower than California toward deregulation, and there has been no desire here to speed up the process in recent years as power reliability became a problem. The PSC estimates that Wisconsin will need an additional 3,000 megawatts of power over the next decade. Hiniker said Wisconsin needs to coordinate its planning to avoid overbuilding. The costs of new power plants are passed on to ratepayers, meaning electric bills will increase as new generation is added. In addition, coal-generated power plants are a major source of air pollution in the state. "We don't have the advance planning that has kept Wisconsin from overbuilding in the past," said Hiniker. "This is something the PSC should be doing." MG&E's deals are: -A 10-year contract to buy 75 megawatts from Calpine Energy Services starting in May 2004. The power will come from the natural gas-fired plant Rock River Energy Center, near Beloit. Calpine Energy Services is a unit of San Jose, Calif.-based Calpine Energy Corp. The plant is being built by Northbrook, Ill.-based SkyGen Energy LLC, which Calpine bought last year from SkyGen President Michael Polsky and Wisvest Corp., a unit of Wisconsin Energy Corp. -A 10-year contract to buy 50 megawatts of power from the Rainy River Energy Corp. starting in May 2002. The power is coming from a natural gas-fired plant near Joliet, Ill. owned by LS Power Co. Rainy River is a unit of Duluth-based Minnesota Power Inc. -A five-year contract to buy 50 megawatts from an El Paso Merchant Energy plant near Cordova, Ill., in western Illinois. The owner of the natural gas facility is the Cordova Energy Center Co., which is a unit of Iowa-based MidAmerican Energy Holdings. Alliant also offered support in the Wednesday filing for a $7 billion plan of Milwaukee-based Wisconsin Energy, which includes five new power plants in Oak Creek and Pleasant Prairie. -- On the Net: CUB: http://www.wiscub.org/ Alliant Energy: http://www.alliant-energy.com Wisconsin Public Service Commission: http://www.psc.state.wi.us Wisconsin Energy: http://www.wisenergy.com/ Madison Gas & Electric: http://www.mge.com Use this file to download and print all the articles in this section (See attached file: Dow Jones Interactive-california-03233001-implications.doc) If you wish to be removed from the distribution list for this update please contact Pru Sheppard - DC. All recipients of this message have been Bcc'd as part of industry best practice for broadcast emails. +-------------------------------------------------------------+ | This message may contain confidential and/or privileged | | information. If you are not the addressee or authorized to | | receive this for the addressee, you must not use, copy, | | disclose or take any action based on this message or any | | information herein. If you have received this message in | | error, please advise the sender immediately by reply e-mail | | and delete this message. Thank you for your cooperation. | +-------------------------------------------------------------+ - Dow Jones Interactive-california-03233001-selected.doc - pic24389.pcx - pic05075.pcx - Dow Jones Interactive-california-03233001-implications.docMessage-ID: <5406765.1075858882521.JavaMail.evans@thyme> Date: Thu, 19 Jul 2001 15:54:00 -0700 (PDT) From: steven.kean@enron.com To: linda.robertson@enron.com Subject: Re: California Amendments DEFEATED! Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Linda Robertson X-cc: X-bcc: X-Folder: \SKEAN (Non-Privileged)\Kean, Steven J.\Sent Items X-Origin: Kean-S X-FileName: SKEAN (Non-Privileged).pst Congrats Linda Robertson 07/19/2001 09:44 AM To: Steven J Kean/NA/Enron@Enron, Richard Shapiro/NA/Enron@Enron, James D Steffes/NA/Enron@Enron, mark s palmer/enron@enronXgate@Enron cc: Subject: California Amendments DEFEATED! John Shelk will provide a more thorough report in a later Email, but I just wanted you to know that the Waxman price cap amendment was just defeated in full Committee markup and the Eshoo refund amendment was defeated. Both by sizable margins. Message-ID: <21510038.1075858883529.JavaMail.evans@thyme> Date: Thu, 12 Jul 2001 13:48:00 -0700 (PDT) From: steven.kean@enron.com To: jeff.dasovich@enron.com Subject: Congressman Ose loved your letter to Sen. Dunn Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Jeff Dasovich X-cc: X-bcc: X-Folder: \SKEAN (Non-Privileged)\Kean, Steven J.\Sent Items X-Origin: Kean-S X-FileName: SKEAN (Non-Privileged).pst ---------------------- Forwarded by Steven J Kean/NA/Enron on 07/12/2001 10:48 AM --------------------------- From: Tom Briggs on 07/12/2001 10:43 AM To: Steven J Kean/NA/Enron@Enron cc: Subject: Congressman Ose loved your letter to Sen. Dunn Message-ID: <18983797.1075858884478.JavaMail.evans@thyme> Date: Sat, 30 Jun 2001 10:59:00 -0700 (PDT) From: steven.kean@enron.com To: cmculbe@us.ibm.com Subject: Re: Philippe Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Christopher Culberson X-cc: X-bcc: X-Folder: \SKEAN (Non-Privileged)\Kean, Steven J.\Sent Items X-Origin: Kean-S X-FileName: SKEAN (Non-Privileged).pst Yes, Phillippe left to join a firm in New York -- I don't know who. "Christopher Culberson" on 06/26/2001 02:42:53 PM To: skean@enron.com cc: Subject: Philippe Steven, I hear Philippe is leaving for Putnam, any truth to this? I've been unable to contact him directly. Thanks in advance. Best Regards, Chris M. Culberson cmculbe@us.ibm.com (281) 556-8104 Message-ID: <26439560.1075858884608.JavaMail.evans@thyme> Date: Wed, 20 Jun 2001 10:04:00 -0700 (PDT) From: steven.kean@enron.com To: linda.robertson@enron.com Subject: Re: Dinner Plans Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Linda Robertson X-cc: X-bcc: X-Folder: \SKEAN (Non-Privileged)\Kean, Steven J.\Sent Items X-Origin: Kean-S X-FileName: SKEAN (Non-Privileged).pst I get in too late tonight, but maybe dinner or drinks on Thurs? Linda Robertson 06/19/2001 06:39 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Dinner Plans You are here Wed and Thur nights. Do you have plans? Do you want to do something with some of the DC staff? Message-ID: <1498778.1075862359626.JavaMail.evans@thyme> Date: Tue, 17 Jul 2001 18:54:00 -0700 (PDT) From: steven.kean@enron.com To: karen.heathman@enron.com Subject: Re: Rick Buy Status Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Karen K Heathman X-cc: X-bcc: X-Folder: \SKEAN (Non-Privileged)\Kean, Steven J.\Sent Items X-Origin: Kean-S X-FileName: SKEAN (Non-Privileged).pst Rick -- I'm so sorry to hear about this, but I'm glad the outlook is good. Let me know if there is anything I can do to help. From: Karen K Heathman/ENRON@enronXgate on 07/17/2001 02:38 PM To: Richard Causey/ENRON@enronXgate, Andrew S Fastow/ENRON@enronXgate, Ben Glisan/HOU/ECT@ECT, Jeffrey McMahon/ENRON@enronXgate, Raymond Bowen/ENRON@enronXgate, Mark Koenig/ENRON@enronXgate, Rebecca Carter/ENRON@enronXgate, Mark Frevert/ENRON@enronXgate, Greg Whalley/ENRON@enronXgate, David W Delainey/HOU/EES@EES, Steven J Kean/NA/Enron@Enron, John J Lavorato/ENRON@enronXgate, John Sherriff/ENRON@EUEnronXGate, Stanley Horton/ENRON@enronXgate cc: Subject: Rick Buy Status Sent this out to my direct reports, but I wanted you to be aware as well. Rick Buy -----Original Message----- From: Heathman, Karen K. Sent: Tuesday, July 17, 2001 2:32 PM To: Bradford, William S.; Ruane, Mark; Brackett, Debbie R.; Furey, Denise; Harris, Molly; Moran, Tom; Rohauer, Tanya; Curry, Ken; Wilson, Mark K; Gorte, David; Tribolet, Michael; Petersen, Randy; Barbour, Karen L.; Larson, Bradford; Schneider, Chip; Hachen, James; Crews, David; Ledlow, James; Schlemmer, Jack; Walker, Mark A.; Murphy, Ted; Port, David; Schultz, Cassandra; Zipter, Rudi; Andrews, Naveen; Nordstrom, Mary; Gorny, Vladimir; Hagelmann, Bjorn; Curry, Wanda; Carson, Rick L.; Lowry, Donna; Rollins, Don; Mcginnis, Stephanie; Bellinghausen, Lynn Subject: FW: Rick Buy Status -----Original Message----- From: Buy, Rick Sent: Tuesday, July 17, 2001 12:07 PM To: Heathman, Karen K. Subject: My Status Most of you have gathered that I haven't been in the office much lately and I wanted to let you why and I am doing it via email so I don't have to say it many times. I have had surgery in the interior of my mouth, specifically the lower right side of my tongue. My dentist had suspected cancer and sent me to an oral surgeon who biopsied the area. This biopsy confirmed the dentist's opinion and off I went to MD Anderson for examination. MDA was more optimistic of diagnosis but said the area needed to be excised in any event which occured at MDA last Wednesday (the 11th). I have been at home recovering since. It has been difficult to speak although it is now much better. I will return to MDA in a month for a follow-up exam. Hopefully the excision was complete and no additional follow- up treatments will be necessary. I have missed several critical meetings and just haven't "been around" but I wanted everyone to know that its not because I've lost interest. Thanks for patience, Rick Message-ID: <8351810.1075852727717.JavaMail.evans@thyme> Date: Wed, 24 Oct 2001 07:11:06 -0700 (PDT) From: ina.rangel@enron.com To: john.arnold@enron.com Subject: Confidential - Voicemail Messages Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Rangel, Ina X-To: Arnold, John X-cc: X-bcc: X-Folder: \JARNOLD (Non-Privileged)\Arnold, John\Inbox X-Origin: Arnold-J X-FileName: JARNOLD (Non-Privileged).pst These were the messages in your voicemail: 1. 10/18/01 - Margaret Allen ....needed your advice on whether her sister should take job with Cal-Pine or Kinder Morgan 2. 10/19/01 - Adrianne Engler ....regarding candidantes that you were suppose to phone interview. (you have sent her an email since this) 3. 10/23/01 - Bob Shults(X3-0397)....they met with Nymex last week and are getting ready send the proposal ont eh document you saw last week. He wants to make sure that you are okay with this and dont have any issues. Message-ID: <26808496.1075853126387.JavaMail.evans@thyme> Date: Thu, 26 Jul 2001 15:17:52 -0700 (PDT) From: michelle.cash@enron.com To: david.oxley@enron.com Subject: RE: Confidential Concern Cc: a..hope@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: a..hope@enron.com X-From: Cash, Michelle X-To: Oxley, David X-cc: Hope, Valeria A. X-bcc: X-Folder: \MCASH (Non-Privileged)\Cash, Michelle\Sent Items X-Origin: Cash-M X-FileName: MCASH (Non-Privileged).pst Valeria is looking into it. Michelle -----Original Message----- From: Oxley, David Sent: Thursday, July 26, 2001 4:13 PM To: Cash, Michelle Subject: FW: Confidential Concern Does OLER deal with these or should I go straight to Gilchrist? David -----Original Message----- From: McVicker, Maureen Sent: Wednesday, July 25, 2001 3:36 PM To: Oxley, David Subject: FW: Confidential Concern Steve Kean asked me to forward this to you. -----Original Message----- From: Sera, Sherri On Behalf Of Office of the Chairman, Sent: Wednesday, July 25, 2001 10:54 AM To: Fleming, Rosalee; Clark, Mary Cc: Butcher, Sharon; Walls Jr., Rob; Kean, Steven J. Subject: Confidential Concern I'm not sure I understand what has happened to this guy, but it's something that should be handled post haste. Thanks, SRS ---------------------- Forwarded by Sherri Sera/Corp/Enron on 07/25/2001 10:52 AM --------------------------- << OLE Object: Picture (Device Independent Bitmap) >> Anonymous From: Anonymous on 07/23/2001 02:08 PM To: cc: Subject: Confidential Concern << File: Ken Lay - Jeff Skilling.doc >> Message-ID: <21041312.1075855725847.JavaMail.evans@thyme> Date: Thu, 15 Mar 2001 06:11:00 -0800 (PST) From: phillip.allen@enron.com To: kim.bolton@enron.com Subject: RE: PERSONAL AND CONFIDENTIAL COMPENSATION INFORMATION Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Phillip K Allen X-To: Kim Bolton X-cc: X-bcc: X-Folder: \Phillip_Allen_June2001\Notes Folders\'sent mail X-Origin: Allen-P X-FileName: pallen.nsf Thanks for the information. It would be helpful if you would send the detailed worksheet that you mentioned. I am surprised to hear that the only restricted shares left are the ones granted this January. I have always elected to defer any distributions of restricted stock. I believe I selected the minimum amount required to be kept in enron stock (50%). Are you saying that all the previous grants have fully vested and been distributed to my deferral account? Thank you for looking into this issue. PhillipMessage-ID: <33442043.1075863590903.JavaMail.evans@thyme> Date: Fri, 4 Aug 2000 03:48:00 -0700 (PDT) From: foothi19@idt.net To: charlotte@wptf.org Subject: [Second Delivery: WPTF Friday Amen Burrito] Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: 7bit X-From: Gary Ackerman X-To: webmaster X-cc: X-bcc: X-Folder: \Robert_Badeer_Aug2000\Notes Folders\All documents X-Origin: Badeer-R X-FileName: rbadeer.nsf Sorry about this gang, but my new computer messed up the e-mail list. It's 4 am and I think I have fixed it. Maybe. Bear with me if you are getting this for the second time this morning. gba X-Mozilla-Status2: 00000000 Message-ID: <398A81DA.E883D290@idt.net> Date: Fri, 04 Aug 2000 01:42:26 -0700 From: Gary Ackerman Reply-To: foothi19@idt.net Organization: Foothill Services X-Mailer: Mozilla 4.74C-CCK-MCD {C-UDP; EBM-APPLE} (Macintosh; U; PPC) MIME-Version: 1.0 To: webmaster Subject: WPTF Friday Amen Burrito Content-Type: multipart/alternative; boundary="------------5CA857B6E2003A3BEF3A907F" THE FRIDAY BURRITO "...more fun than a fortune cookie, and at least as accurate." Everyone is getting into the act. When I started this gig, I was the only guy in town writing to folks like you about the power industry in California. I wrote about what?s new, what?s happening, and all the important stuff. This week, Governor Gray Davis decided to write his own Burrito. His epistle got more press than mine, but why is he muscling in on my turf? Not to be outdone, PUC President Loretta Lynch released a report which looks into every facet of California?s power business. No stone left unturned. I?m telling you, there isn?t enough room in this business for all of us. They need to clear out. With people like Herr (Hair?) Peace, Governor I?m-Not Mr.-Rogers Davis and Let?s Do Lynch, who needs a Friday Burrito? They re-define our reality each week with mind-numbing aplomb. For example, starting in early June, the PX was ordered to compete for business against other Qualified Trading Vehicles. Then, two weeks later, the Energy F_hrer legislated that idea to an early death which kept the status quo for at least one year. This week the PUC approved 5-year bilateral deals for PG&E and SCE, thereby opening the PX to competition, and emasculating the PX?s Block Forward Market. Zip, bam, boom. I can?t wait to see what next week will bring. I hear Senator Bowen is holding Committee hearings on re regulating the industry, and the Governor?s new Energy Security Council will meet to decide six things: What?s for lunch? Who will sit at the head of the table? Does anyone have good seats for next week?s Democratic convention? Is there anyone we haven?t indicted yet in the power industry? Who will crank up the air conditioning in this room? It?s getting too warm. Then, they will collect data from innocent businesses under subpoena, ignore the facts, and publish a report. It makes one want to take a deep breath, and inhale the scented fumes of democracy. You know, I can?t think about where to begin, so let?s start somewhere. >>> Things on the Island of California @@@ Is there anyone left at SDG&E with a brain? @@@ The PUC issues its scathing report @@@ The ISO invokes $250 price caps. Duh! >>> Things at the throne of FERC @@@ Amen for the Morgan Stanley Order >>> Odds and Ends (_!_) >>> Things on the Island of California @@@ Is there anyone left at SDG&E with a brain? Well, the answer very clearly is no. I have been astounded by repeated attempts of SDG&E?s most senior people to ape humans, but instead they mimic apes. Consider the following. First, they waltz their default customers into the summer with little of no protection from price spikes in the wholesale market. Forgivable in that it is human to err. The prices skyrocket in June, and they start looking for who to blame. _Must be them damn independent generators,O say their managers. Gary Cotton informs the ISO Governing Board that hedging SDG&E?s position in the Block Forward Market wouldn?t have made any difference. There?s one nobel laureate who missed his prime. Next, under pressure, they ask for help from suppliers and anyone else who will assist the utility and their customers. Nine offers show up at their table, and they can?t choose any of them. Again, Mr Cotton tells his fellow ISO Governing Board members that these things take time, and we don?t to rush since there are many legislative barriers, and, well, the surfing was good this week so why spoil it? Now they are in a panic because the Energy F_hrer is visiting old ladies living in trailer parks, advising them not to pay their SDG&E electricity bill, and to continue to operate their air conditioners. SDG&E puts a full page ad in the local newspaper telling everyone that SDG&E is doing everything it can to lower their electric bills, including asking the ISO for a $250 price cap, but the public can help by calling the ISO [address and phone number provided in the ad] and urging them to lower the cap. I always thought the location of the ISO was a State secret for security reasons. No secrets in San Diego. But we are not done. No sir, we are not. Those buffalo heads who run that company decide they will win a gold star on their collective foreheads, and implement one of the four resolutions passed by the Electric Oversight Board. The one they pick is to petition FERC on an expedited basis to cap at $250, the price at which sellers may bid energy or ancillary services into the ISO and the PX. The primary reason is that Western power markets are not workably competitive. In other words, they want FERC to set a max price on what generators can sell in addition to the price limit at which the ISO can buy! What I find most astounding about this double talk is that SDG&E continues to collect tons of money from the sales of regulatory must run energy into the PX. These are sales from their stranded assets. Their grief hasn?t abated their greed. So, to recap, SDG&E missed the boat on price hedging, failed to win consumer confidence in public meetings, asked for help from suppliers and did nothing in response, then filed at FERC to cap the sale price because the wholesale market into which they sell (over-priced?) energy is not workably competitive. Too much time in the direct sun light. >>> Things on the Island of California @@@ The PUC issues its scathing report The PUC report released yesterday is a gem with which I have not spent enough time. I only read the Executive Summary, and that only because our counsel, Dan Douglass forwarded me a copy. Let me pick out some of the gems in President Lets Do Lynch?s burrito. I would recommend reading the whole text if you have time, and if you seek perverse entertainment. _California is experiencing major problems with electricity supply and pricing caused by policies and procedures adopted over the past ten years. _ Since June, wholesale prices for electrical power in California have increased on average 270% over the same period in 1999, resulting in over $1 billion in excess payments for electricity. _Hot weather, aging power plant and transmission infrastructure, and dysfunctional bidding behavior in the wholesale power markets combined to drive prices up ... _Because of serious market defects and tight supply of electricity, purchasers of California power will likely pay billions more in electricity costs this year. Moreover, these price increases do not necessarily fund new investments in electricity supply or delivery reliability - they may flow solely to power producer profit margins. _Despite the Electricity Oversight Board's legislative mandate to oversee those institutions, we have been unable to obtain [bid] data. Nevertheless, ... , we believe enough evidence of questionable behavior exists that the Attorney General should conduct an investigation into these statewide market practices, coordinating with other State agencies, including the PUC and the EOB. Such an investigation would provide the factual foundation that California policy makers and regulators need to recover any illegally obtained profits. _A momentous consequence of California's attempt to create a market in electricity is that the federal government now regulates California's electric system. Washington D.C. now controls pricing decisions directly at the wholesale level and indirectly at the retail level and, to the extent that supply incentives are correlated to prices, Washington, D.C. now affects California's ability to attract new investment in power plants. _Past administrations' willingness to cede the State's authority to the federal government combined with the legislative creation of two non-public supervisory organizations that have no duty to protect the public or consider the retail customer. The "Independent System Operator" (ISO) and the "Power Exchange" (PX), the nonprofit private corporations that operate the State's transmission system and control wholesale pricing policies, are governed by boards whose members can have serious conflicts of interest. Some of these board members or their companies financially benefit from higher prices in electricity markets. Neither of these private organizations is accountable to the State or its consumers .... _Despite the federalization and the fragmentation of the State's electric services, the State of California should protect its businesses and consumers from cartel pricing; collusive behavior; inadequate power plant maintenance and lack of market planning for adequate electricity supplies. _California consumers and businesses deserve to know in advance - as San Diegans did not this summer - how and when the price of an essential service like electricity will double. California is now largely constrained by federal mandates from providing comprehensive retail price relief as long as wholesale prices remain so high. If California tried to re-impose a price freeze in San Diego now, federal regulators would likely prevent that action. ... Short-term price relief, however, cannot resolve market gaming or fundamental wholesale pricing problems controlled by federal regulators. _We have been precluded from obtaining the data necessary to know if the ISO and PX failed to detect manipulation and gaming on several fronts. We do not know how market players acted in price offering and bidding and scheduling. The FERC has just announced an inquiry into national pricing and energy market issues. California should not wait for national findings before it investigates California market practices. We recommend that the California Attorney General immediately subpoena relevant records and data to determine the pricing and offering behavior of market participants; the actions of the ISO and its board members; and the actions of generators in supplying California's energy needs. _Ten Actions to Consider or Act Upon to Prevent Current Electricity Problems From Spreading in 2001: ... 2. Create a California Energy Council, modeled on the National Security Council, to unify State action to resolve energy problems and to perform integrated energy planning; 3. Ask FERC for extended wholesale price cap authority to moderate California wholesale market pricing; 4. Ask FERC to recognize the defects in the California and western regional markets and find that no competitive market exists in California power markets; ... 8. Eliminate potential conflicts of interest in ISO/PX stakeholder boards; 9. Improve California's ability to obtain ISO and generator data and enhance the State's enforcement capability for power plant maintenance; price manipulation and generation gaming, consistent with protection of proprietary business information; 10. Provide the EOB with effective enforcement ability and additional oversight authority for the ISO and PX. _Ten Issues to Consider or Act Upon Within the Next Six Months: ... 4. Streamline state power plant siting procedures; consistent with environmental requirements, and prioritize applications to advance clean, BACT+ power plant proposals. 5. Institute "use-it -or- lose-it" permitting power plant licensing and emissions credits rules to ensure power plants get built; ... 8. Reform PX pricing protocols and structures to lower wholesale and retail prices and reduce excess profitsO I told you I don?t need to write a Burrito anymore. The Democrats in Sacramento are doing that for me. Welcome comrade. >>> Things on the Island of California @@@ The ISO invokes $250 price caps. Duh! It is really hard to describe the drama of an ISO Governing Board meeting, especially when our favorite topic arises. It seems the only time the Board becomes animated is when one of three issues are on the agenda: price caps, FTRs, and priorities for software enhancements. Otherwise, its pretty much hum-drum. %Round and %round we went, once again. A few more forced votes tipped the scale in favor of the cap. There were 15 yes votes, which included a forced yes vote from our friend Jerry Toenyes by order of Secretary of Energy Mr. Richardson. [Jerry, did you realize that the last letters of your name could be re-arranged to spell _NO ET YESO? Kind of a french thing.] I?m sorry about that vote, Jerry. You still go in my book as one of the brave and bold for standing up to that sort of intimidation for so long. Your picture in the SF Chron said it all. The brave souls who stood tall and voted NO included David Parquet (Enron), Jan Smutny-Jones (IEP), Barbara Barkovich (CLECA), Caolyn Kehrein (CMA), Dan Kirshner (EDF), and Stacy Roscoe (Procter & Gamble). Now, I must admit that Dynegy?s Greg Blue did help by voting a Texas No, spelled _A-B-S-T-A-I-NO. I have instructed Dynegy trader Dave Francis in Houston to work with Greg to correct that problem. We?re going to work things out. The Energy F_hrer addressed the Board, again. I didn?t mind that I only had a few brief, very brief moments to address the Board, and Herr (Hair?) Peace got over 20 minutes. That didn?t bother me at all. He did more damage to himself in 20 than I could do in 2. He blasted away at everyone who opposed him. He pined about Camden quitting the Board. He said he knew how prices and markets work, that it isn?t the way those academic egg-head, FERC-loving economists tell you who pray to the gods of competition. He lambasted WAPA for withholding generation to protect fish and wildlife (what was that all about?). He predicted that on Thursday?s PUC meeting he and all the other powerful Democrats, Republicans and angry citizens of San Diego would demand that the PUC impose a rate cap on retail electric rates in San Diego that are just and reasonable (it didn?t happen). And on and on and on. This man is very delusional. He believes that Steve, and only Steve Peace can save the world. He believes that political will trumps judicial, quasi-judicial, or independent Board actions. This man makes relevant all the abstract musings of the philosopher Friedrich Nietzsche (1844-1900) ... The will to power, the ?bermensch, the transvaluation of values, etc. But we are getting under (uber?) his skin, with the help of the press. Wednesday afternoon I called Commissioner Dick Bilas to see if he thought whether the next day?s PUC meeting was going to be a roll over. Dick said he got a call from Peace, and that Peace said he would not come to the meeting. Apparently, Peace had received a lot of press, and all of it bad. That?s the thin line of freedom which keeps tyranny at least one step away from our front door. >>> Things at the throne of FERC @@@ Amen for the Morgan Stanley Order And now, the good news. You deserve this. FERC gave the California market a little wiggle room last Friday. FERC issued a last minute reply to the complaint by Morgan Stanley Capital Group relating to the ISO?s intent to lower the price cap. FERC denied the complaint, but they didn?t waste time with an Order to simply deny a complaint. FERC danced on the head of the ISO and pulled the bite out of the price cap. Here are some excerpts: _We accepted this [Amendment 21], not because it was a cap on sellers? prices but because it would promote order and transparency in the market by clearly telling sellers of the maximum price the ISO was willing to pay and allowing sellers to make informed economic choices on whether to sell in the ISO market or to sell elsewhere... _ ... The ISO has no more or less ability to procure capacity and energy than any other buyer of these services ... If the ISO is unable to elicit sufficient supplies at or below its announced purchase price ceiling (because generators are free to sell elsewhere if they choose), it will have to raise its purchase price to the level necessary to meet its needs. ... Therefore, an increase in out-of-market (OOM) calls for generation may be necessary to maintain system reliability. Because the current payment for OOM is not subject to a maximum purchase price, the resulting overall payments may be higher. _To the extent the ... ISO Board resolution contemplates implementing a directive that generators must bid their capacity into the ISO markets under any circumstances (e.g., when system load exceeds 38,000 MW), such a requirement is not permitted by our ... Order and the ISO tariff. ... Future implementation of the ISO Board resolution with regard to a requirement to sell would require significant revisions to the ISO market rules. Such market changes could not become effective absent a corresponding amendment to the ISO tariff which would have to be filed under section 205 of the FPA.O Well. What do you think about that? Just wait. Here is what the sleeping bear, Commissioner Hebert said in his concurring remarks: _Getting to the bottom of the problem, in my view, requires us to begin a proceeding to rescind our approval of the ISO as the operator of the California grid. The record supports such a move. ... A memorandum to the ISO from a stakeholder who resigned from the governing board eloquently brings to our attention repeated attempts to undermine the independence of the ISO. The memorandum also thoughtfully outlines consequences to the markets of a return to %command and control.? _Because these allegations come from a non-market participant, especially should we take heed. We must also take notice of the public pressure on the Board to compromise its independence.O Amen, brother, amen. >>> Odds and Ends (_!_) As you can imagine, this week, like an endless string of weeks before this has been interminable. I get about three phone calls a day from press reporters, very little of which ever sees print. My shtick is just too complex for casual readers. But I do notice that the reporters are asking better questions. The public is becoming more savvy. The information flow is moving in our favor, and will disarm the forces of evil, in about 10 years. I have other problems on my mind. I am working on a new computer system. Really, it?s just an upgrade of an older computer that is a bit faster than the laptop I tried to upgrade, very unsuccessfully. As a result of the all the new hardware and software I purchased, my office looks like a war zone with an odd mix of PUC service copies, computer documentation, and diskettes laying all around. Quite a mess. Prepare for the future. Our next general meeting is scheduled for Thursday and Friday, October 5 and 6 at Moro Bay. Barb Ennis will prepare a blurb for us in next week?s Burrito about room reservations, timing, golf, etc. Our guest speakers will include MSC Chairman Professor Frank Wolak who will talk on the subject of his choice, Ms. Irene Moosen of Grueneich Resource Advocates who will make a presentation on the distributed generation case before the PUC, and William Freddo of PG&E National Energy Group who will give us some education on operating a power plant inside the New England ISO. Now for your daily bread, provided this week by Dan Douglass. Last week we had a joke about Catholics. This week it?s agnostics. ===================== An atheist was taking a walk thru the woods, admiring all that the accident of evolution had created. "What majestic trees! What powerful rivers! What beautiful animals!" he said to himself. As he was walking alongside the river he heard a rustling in the bushes behind him. As he turned to look, he saw a 7 foot grizzly bear charging towards him. He ran as fast as he could up the path. He looked over his shoulder and saw that the bear was closing in on him. He tried to run even faster, so scared that tears were coming to his eyes. His heart was pumping frantically as he tried to run even faster, but he tripped and fell on the ground. He rolled over to pick himself up and saw the bear right on top of him raising its paw to kill him. At that instant he cried out "Oh my God!" And time stopped. The bear froze. The forest was silent. The river even stopped flowing. A bright light shone upon the man, and a voice out of the sky said, "You deny my existence all these years, teach others I don't exist and even credit my creation to a cosmic accident, and now do you expect me to help you out of this predicament? Am I to count you as a believer?" The atheist, ever so proud, looked into the light and said, "It would be rather hypocritical to ask to be counted as a believer after all these years, but could you make the bear a believer?" "Very well" said the voice. And the light went out, the river flowed, the sounds of the forest continued, and the bear brought both paws together, bowed his head, and said, "Lord, I thank you for this food which I am about to receive." ================== Amen. And have a great weekend. Oh, and thanks to all of you who sent me happy birthday wishes. It was very much appreciated. KSB gba - att1.htmMessage-ID: <25447472.1075856582182.JavaMail.evans@thyme> Date: Wed, 14 Jun 2000 09:16:00 -0700 (PDT) From: steven.leppard@enron.com To: dale.surbey@enron.com Subject: Security question Cc: grant.masson@enron.com, vince.kaminski@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: grant.masson@enron.com, vince.kaminski@enron.com X-From: Steven Leppard X-To: Dale Surbey, Richard Lewis/LON/ECT@ECT X-cc: Grant Masson, Vince J Kaminski X-bcc: X-Folder: \Vincent_Kaminski_Jun2001_5\Notes Folders\C:\Mangmt\Group\Management X-Origin: Kaminski-V X-FileName: vkamins.nsf Dear guys Having been out of the office for a couple of days, I've found myself the victim of theft (again). This time my desk drawer key has been stolen from its "hiding place" under my telephone. I *always* lock my drawers and keep the key in the same place, but on arriving in the office today I found the drawers unlocked, and the key missing. Although there's nothing sensitive on or around my desk, I'm concerned about the security implications of someone sniffing around the office in this manner. I also found the papers on my desk extensively reshuffled last week. Last year, in our old office, I had my only two real options books stolen from among the many and varied books on my desk. That couldn't have been a random theft, and I fear this isn't either. I can't understand who'd be so interested in a Research guy's belongings! Can we ask security to check their surveillance footage for any suspicious activity around my desk? Cheers, SteveMessage-ID: <7553175.1075863444700.JavaMail.evans@thyme> Date: Mon, 17 Sep 2001 21:01:37 -0700 (PDT) From: wolak@zia.stanford.edu To: j.kaminski@enron.com Subject: Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: "Frank A. Wolak" @ENRON X-To: Kaminski, Vince J X-cc: X-bcc: X-Folder: \VKAMINS (Non-Privileged)\Kaminski, Vince J\Inbox X-Origin: Kaminski-V X-FileName: VKAMINS (Non-Privileged).pst Vince, I agree with you that it's a lesson people need to learn over and over again. I can't tell you how many politicians I met over the past year who really don't like markets and certainly don't understand how or why they work. These aren't just the minor leaguers in Sacramento, but the big league players in Washington. I also agree that the academic community can play "an important role in shaping public opinion and in explaining the logic of deregulation process." I'd like to think that is in large part what I have been trying to do. FrankMessage-ID: <5428433.1075857060219.JavaMail.evans@thyme> Date: Tue, 11 Jan 2000 00:02:00 -0800 (PST) From: richard.shapiro@enron.com To: vince.kaminski@enron.com Subject: Re: Congratulations Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Richard Shapiro X-To: Vince J Kaminski X-cc: X-bcc: X-Folder: \Vincent_Kaminski_Jun2001_9\Notes Folders\Personal X-Origin: Kaminski-V X-FileName: vkamins.nsf Thanks. Vince J Kaminski@ECT 01/11/2000 08:01 AM To: Richard Shapiro/HOU/EES@EES cc: Subject: Congratulations Rick, I have just looked at the memo regarding promotions. Congratulations - well deserved. Vince Message-ID: <3454095.1075840788231.JavaMail.evans@thyme> Date: Tue, 29 Jan 2002 12:07:33 -0800 (PST) From: j.kaminski@enron.com To: wbalson@crai.com Subject: RE: I've joined Charles River Associates Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Kaminski, Vince J X-To: '"Balson, William" @ENRON' X-cc: X-bcc: X-Folder: \vkamins\Sent Items X-Origin: KAMINSKI-V X-FileName: vincent kaminski 1-30-02.pst Bill, Yes, one of the options I am looking at. Vince -----Original Message----- From: "Balson, William" @ENRON Sent: Tuesday, January 29, 2002 1:53 PM To: Kaminski, Vince J Subject: RE: I've joined Charles River Associates Have you considered joining a consultancy? -----Original Message----- From: Vince.J.Kaminski@enron.com To: wbalson@crai.com Sent: 1/29/02 11:43 AM Subject: RE: I've joined Charles River Associates Bill, Lacima is relatively small, but they have two very competent and experienced principals: Chris Strickland and Les Clewlow. I am looking right now at a number of options. Hopefully, I shall make a decision within a few weeks. Vince -----Original Message----- From: "Balson, William" @ENRON Sent: Tuesday, January 29, 2002 1:30 PM To: Kaminski, Vince J Subject: RE: I've joined Charles River Associates Have you developed plans? I'd be interested in your evaluation of Lakima Group, whom I believe you've worked with. How big are they? -----Original Message----- From: Vince.J.Kaminski@enron.com To: wbalson@crai.com Sent: 1/29/02 11:12 AM Subject: RE: I've joined Charles River Associates Bill, Delayed congratulations. Vince -----Original Message----- From: "Balson, William" @ENRON Sent: Monday, December 10, 2001 5:14 PM To: 'vkamins@enron.com' Subject: I've joined Charles River Associates Hi Vince - Its very sad to see what has happened. I hope you are doing OK under the circumstances. I wanted also to let you know that I'm transitioning to an advisory role at Opt4 since they are now in a more operational mode, rather than developmental. I've joined Charles River Associates in the Palo Alto office. What are your plans for the future? I would like to extend an invitation to get to know us better, and perhaps to collaborate if our interests coincide. When do you get back from vacation? Bill Balson Vice President Charles River Associates 285 Hamilton Avenue Palo Alto, CA 94301 Direct: 650-847-2227 Cell: 650-823-2510 FAX: 650-325-2488 wbalson@crai.com ********************************************************************** This e-mail is the property of Enron Corp. and/or its relevant affiliate and may contain confidential and privileged material for the sole use of the intended recipient (s). Any review, use, distribution or disclosure by others is strictly prohibited. If you are not the intended recipient (or authorized to receive for the recipient), please contact the sender or reply to Enron Corp. at enron.messaging.administration@enron.com and delete all copies of the message. This e-mail (and any attachments hereto) are not intended to be an offer (or an acceptance) and do not create or evidence a binding and enforceable contract between Enron Corp. (or any of its affiliates) and the intended recipient or any other party, and may not be relied on by anyone as the basis of a contract by estoppel or otherwise. Thank you. **********************************************************************Message-ID: <14136486.1075858478980.JavaMail.evans@thyme> Date: Thu, 31 May 2001 07:03:21 -0700 (PDT) From: kaminski@enron.com To: pannesley@riskwaters.com Subject: RE: Risk 2001 Australia Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Kaminski, Vince J X-To: '"philip annesley" @ENRON' X-cc: X-bcc: X-Folder: \Vince_Kaminski_Jun2001_10\Sent Items X-Origin: Kaminski-V X-FileName: vkamins.pst Philip, Please, try Frank Wolak from Stanford University. He is the best expert on California right now. Vince -----Original Message----- From: "philip annesley" @ENRON [mailto:IMCEANOTES-+22philip+20annesley+22+20+3Cpannesley+40riskwaters+2Ecom+3E+40ENRON@ENRON.com] Sent: Wednesday, May 30, 2001 7:50 PM To: Kaminski, Vince J Subject: RE: Risk 2001 Australia Vince Thanks for coming back to me on this anyway. Would you be able to suggest anyone else - either in Australia, Europe or US who would be good to get to discuss the California crisis? kind regards. Philip -----Original Message----- From: Vince.J.Kaminski@enron.com [mailto:Vince.J.Kaminski@enron.com] Sent: Thursday, May 31, 2001 12:00 AM To: pannesley@riskwaters.com Cc: Vkaminski@aol.com Subject: RE: Risk 2001 Australia Philip, I have to decline the invitation with regrets. I have too many commitments right now. Vince Kaminski -----Original Message----- From: "philip annesley" @ENRON [mailto:IMCEANOTES-+22philip+20annesley+22+20+3Cpannesley+40riskwaters+2Ecom +3E+40ENRON@ENRON.com] Sent: Monday, May 28, 2001 3:27 AM To: vkamins@enron.com Subject: Risk 2001 Australia Dear Vince Just a quick message to follow up on the email that I sent you recently inviting you to speak at our forthcoming congress, Risk 2001 Australia, which is taking place in Sydney on 20 & 21 August 2001. Have you had an opportunity to consider the invitation yet? We are aiming to have the programme printed next week, so I would really need to know as soon as possible if you would be available to speak at this year's congress. I am working from our Hong Kong office for this week only (Tel: +852 2545 2710), and I can be contacted by phone there or by email. Kind regards. Philip Philip Annesley Conference Producer Risk Waters Group +44 20 7484 9866 +44 20 7484 9800 www.risk-conferences.com/risk2001aus Message-ID: <25473912.1075863420369.JavaMail.evans@thyme> Date: Tue, 15 May 2001 06:07:31 -0700 (PDT) From: j.kaminski@enron.com To: wade.cline@enron.com Subject: RE: Help for Krishnarao Pinnamaneni Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Kaminski, Vince J X-To: Cline, Wade X-cc: X-bcc: X-Folder: \VKAMINS (Non-Privileged)\Kaminski, Vince J\Sent Items X-Origin: Kaminski-V X-FileName: VKAMINS (Non-Privileged).pst Wade, Thanks for your help. Krishna advised me of the conversation he had with you. Vince -----Original Message----- From: Cline, Wade Sent: Monday, May 14, 2001 1:37 AM To: Vince.Kaminski@enron.com Subject: Re: Help for Krishnarao Pinnamaneni ---------------------- Forwarded by Wade Cline/ENRON_DEVELOPMENT on 05/14/2001 12:04 PM --------------------------- Delivery Failure Report Your document: Re: Help for Krishnarao Pinnamaneni was not delivered to: Vince J. Kaminski/ENRON@enronXgate because: Invalid/unknown recipient [MAPI Reason Code: 1, MAPI Diagnostic Code 1] What should you do? You can resend the undeliverable document to the recipients listed above by choosing the Resend button or the Resend command on the Actions menu. Once you have resent the document you may delete this Delivery Failure Report. If resending the document is not successful you will receive a new failure report Unless you receive other Delivery Failure Reports, the document was successfully delivered to all other recipients. NAHOU-MSCNX02-LME-NOTES/NA/ENRON, NAHOU-LNINT01/Enron, ENE-NS03/Enron, EI-NHUB01/ENRON_DEVELOPMENT, EI-NMUMBAI01/ENRON_DEVELOPMENT ________________________ To: Vince J. Kaminski/ENRON@enronXgate cc: Pinnamaneni Krishnarao/ENRON@enronXgate From: Wade Cline/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT Date: 05/14/2001 12:49:39 AM CDT Subject: Re: Help for Krishnarao Pinnamaneni Vince, I will certainly try. I am not optimistic primarily because this is handled out of Chennai, as it must since the parents are residents of Andhra Pradesh. Our earlier requests for visas from Chennai have been a very mixed bag, with us being turned down more often than not. The fact of the matter is that the visa officers in the respective consulates have incredible amounts of discretion and ability to say no. Once they say no, it is very difficult to reverse. But I will go through our good contacts at the US Consulate in Mumbai, as this has had more success than us speaking directly to Chennai. Wade From: Vince J. Kaminski/ENRON@enronXgate on 05/11/2001 10:37 AM CDT To: Wade Cline/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT cc: Vince J. Kaminski/ENRON@enronXgate, Pinnamaneni Krishnarao/ENRON@enronXgate Subject: Help for Krishnarao Pinnamaneni Wade, I am writing to ask you to help my associate, Krishnarao Pinnamaneni, who faces a very difficult personal situation. You probably remember Krishna from his visits to our Bombay office when he was helping you on a few projects. A brief outline of the facts. 1. His wife is pregnant. She gave birth to their daughter, Pallavi, a few years ago after a very complicated pregnancy. Pallavi was a premature child and her survival was a miracle (we all thank the Almighty for this wonderful child). Current pregnancy is also very complicated. 2. Krishna invited his in-laws to visit and stay with them to care for his wife. The application for a tourist visa was denied and the reason given for the denial was that they had overstayed the term of the visa during the previous visit. The irony is that they complied with the US laws: they had asked for an extension of the visa and the extension was granted. The company can, of course, intervene on Krishna's behalf. Krishna made an outstanding contribution to Enron (he is currently a VP) and to the American society. I am sure that Ken Lay would have no objections to write a letter on his behalf to the State Department. I would prefer, however, to try informal channels first to avoid confrontational approach. It may be better for all the involved in the long-run. I hope you can use your personal contacts to intervene on Krishna's behalf and ask for a reversal of the decision on humanitarian grounds. I shall fax to you a copy of the decision. Thanks. Vince << File: Krishna's Letter.DOC >> Message-ID: <24575622.1075863420436.JavaMail.evans@thyme> Date: Tue, 15 May 2001 06:09:33 -0700 (PDT) From: j.kaminski@enron.com To: steve.leppard@enron.com Subject: RE: Final Research PRC Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Kaminski, Vince J X-To: Leppard, Steve X-cc: X-bcc: X-Folder: \VKAMINS (Non-Privileged)\Kaminski, Vince J\Sent Items X-Origin: Kaminski-V X-FileName: VKAMINS (Non-Privileged).pst Steve, It will be my pleasure. Vince -----Original Message----- From: Leppard, Steve Sent: Tuesday, May 15, 2001 4:10 AM To: Herbelot, Olivier; Lewis, Richard; Clarke, Niamh; Kaminski, Vince J Subject: Final Research PRC Hi all The current PRC is the last on which I'll be assessed as a Research guy, so I'd like to ask if you'd be prepared to act as reviewers for me? Thanks, SteveMessage-ID: <12028029.1075863423162.JavaMail.evans@thyme> Date: Tue, 29 May 2001 15:36:34 -0700 (PDT) From: j.kaminski@enron.com To: g..moore@enron.com Subject: RE: VACATION Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Kaminski, Vince J X-To: Moore, Kevin G. X-cc: X-bcc: X-Folder: \VKAMINS (Non-Privileged)\Kaminski, Vince J\Sent Items X-Origin: Kaminski-V X-FileName: VKAMINS (Non-Privileged).pst Kevin, Enjoy your vacation. Vince -----Original Message----- From: Moore, Kevin G. Sent: Tuesday, May 29, 2001 12:22 PM To: Roberts, Mike A.; Kaminski, Vince J; Gibner, Stinson; Krishnarao, Pinnamaneni; Kohli, Sandeep; Crenshaw, Shirley; Dupont, Anita; Marquez, Jose; Shanbhogue, Vasant Subject: VACATION fyi, I will be on vacation beginning June 1st and ending June 10th. Please note that if any information is needed in my absence you may contact Sam Smith or you may reach me at home. My home phone is 713/528-3763. Thanks Kevin Moore Have a Wonderful Day and Week in my absence...........Message-ID: <24032384.1075863426836.JavaMail.evans@thyme> Date: Mon, 18 Jun 2001 14:56:10 -0700 (PDT) From: j.kaminski@enron.com To: vkaminski@aol.com Subject: Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Kaminski, Vince J X-To: 'vkaminski@aol.com' X-cc: X-bcc: X-Folder: \VKAMINS (Non-Privileged)\Kaminski, Vince J\Sent Items X-Origin: Kaminski-V X-FileName: VKAMINS (Non-Privileged).pst http://www.ssrn.com/Message-ID: <3850175.1075863427087.JavaMail.evans@thyme> Date: Tue, 19 Jun 2001 15:20:53 -0700 (PDT) From: j.kaminski@enron.com To: pinnamaneni.krishnarao@enron.com Subject: FW: Friday? Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Kaminski, Vince J X-To: Krishnarao, Pinnamaneni X-cc: X-bcc: X-Folder: \VKAMINS (Non-Privileged)\Kaminski, Vince J\Sent Items X-Origin: Kaminski-V X-FileName: VKAMINS (Non-Privileged).pst Krishna, FYI Vince -----Original Message----- From: "Dale M. Nesbitt" @ENRON [mailto:IMCEANOTES-+22Dale+20M+2E+20Nesbitt+22+20+3Cdale+2Enesbitt+40marketpointinc+2Ecom+3E+40ENRON@ENRON.com] Sent: Tuesday, June 19, 2001 12:18 PM To: Kaminski, Vince J Cc: Thomas Y. Choi Subject: RE: Friday? Vince: Perfect. I forgot what year your son was. Did he graduate with Chelsea and the Clintons? Tons of Bay Area TV coverage of the Clinton graduation (with honors they said) from Stanford. (How can you graduate with honors when you are traveling all over the world with mom and dad.) Fortunately, they plan to be gone when you get here...lot less crowded. I will look forward to hearing from Krishna via email or via cell phone at 650.218.3069. Thanks very much for accelerating this and putting it on your agenda. Dale -----Original Message----- From: Kaminski, Vince J [mailto:Vince.J.Kaminski@enron.com] Sent: Tuesday, June 19, 2001 8:07 AM To: dale.nesbitt@marketpointinc.com Cc: Krishnarao, Pinnamaneni; Crenshaw, Shirley Subject: RE: Friday? Dale, I shall be in your part of the world on Friday (Palo Alto). I shall ask Krishna to meet you in my place. Vince Kaminski > -----Original Message----- > From: "Dale M. Nesbitt" > @ENRON > [mailto:IMCEANOTES-+22Dale+20M+2E+20Nesbitt+22+20+3Cdale+2Enesbitt+40m > arketpointinc+2Ecom+3E+40ENRON@ENRON.com] > Sent: Tuesday, June 19, 2001 2:32 AM > To: Kaminski, Vince J > Subject: Friday? > > Vince: > > I am firming up my plans for this week. Is it the right time to get > together this coming Friday at your facility to talk about NARG and/or > the > impending NARG demo with you and/or the responsible Enron people? > Give me > an email shout if you could to confirm or schedule for a later date. > It > would be propitious from our end to initiate the discussions with the > right > people in your organization on that day because my gas guy Tom Choi > (Kim > Watson and others know him) will also be with me in Houston on that > day. > > All the best. I hope you have dried out. > > Dale Nesbitt >Message-ID: <9778349.1075863427200.JavaMail.evans@thyme> Date: Wed, 20 Jun 2001 07:59:32 -0700 (PDT) From: j.kaminski@enron.com To: nelson.neale@enron.com Subject: RE: Rice Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Kaminski, Vince J X-To: Neale, Nelson X-cc: X-bcc: X-Folder: \VKAMINS (Non-Privileged)\Kaminski, Vince J\Sent Items X-Origin: Kaminski-V X-FileName: VKAMINS (Non-Privileged).pst Nelson, I don't see any problems with #1. For number 2, mention that the paper was written when you were a studentt at Rice. Vince -----Original Message----- From: Neale, Nelson Sent: Wednesday, June 20, 2001 8:46 AM To: Kaminski, Vince J Cc: Shanbhogue, Vasant Subject: Rice Vince, A couple of brief issues: 1) I have been asked to deliver a lecture(s) to a Rice environmental engineering class in the fall. Most of the preparatory work for the class is already complete, so I don't foresee any large time commitment for this endeavor. If there is a problem, let me know. 2) A manuscript based on my dissertation work was recently accepted for publication by ASCE Journal of Environmental Engineering. I would like to use my Enron address and contact information on the work, but am unsure of company policies. I can certainly default to the Rice information if there is a problem. Nelson Message-ID: <10137206.1075863427495.JavaMail.evans@thyme> Date: Mon, 25 Jun 2001 09:38:01 -0700 (PDT) From: j.kaminski@enron.com To: ekrapels@esaibos.com Subject: RE: Neptune -- merchant transmission Cc: vkaminski@aol.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: vkaminski@aol.com X-From: Kaminski, Vince J X-To: 'ekrapels@esaibos.com' X-cc: 'vkaminski@aol.com' X-bcc: X-Folder: \VKAMINS (Non-Privileged)\Kaminski, Vince J\Sent Items X-Origin: Kaminski-V X-FileName: VKAMINS (Non-Privileged).pst Ed, I am still here. Kaminski is a very popular Polish name. My next stage in life, when it happens , is a small cottage close to a beach, not another corporate job. Vince -----Original Message----- From: "Edward Krapels" @ENRON [mailto:IMCEANOTES-+22Edward+20Krapels+22+20+3Cekrapels+40esaibos+2Ecom+3E+40ENRON@ENRON.com] Sent: Friday, June 22, 2001 3:08 PM To: Kaminski, Vince J Subject: RE: Neptune -- merchant transmission Vince, Are you still there? I've noticed a Vincent F Kaminski who is manager of planning at Alleghany... Ed -----Original Message----- From: Kaminski, Vince J [mailto:Vince.J.Kaminski@ENRON.com] Sent: Monday, June 04, 2001 12:31 PM To: ekrapels@esaibos.com Subject: RE: Neptune -- merchant transmission Hello Ed, It sounds very interesting. I forwarded your messages to two members of my group who work on the problems related to transmission (a key to the power markets successful growth). I shall share with you their reaction. I hope everything is going well. Vince > -----Original Message----- > From: "Edward Krapels" @ENRON > [mailto:IMCEANOTES-+22Edward+20Krapels+22+20+3Cekrapels+40esaibos+2Eco > m+3E+40ENRON@ENRON.com] > Sent: Friday, June 01, 2001 5:12 AM > To: Vincent Kaminski \(E-mail\) > Subject: Neptune -- merchant transmission > > Dear Vince, > > Greetings from Boston... In the last year, I've been associated with > the > Neptune merchant transmission project... check it out at > www.NeptuneRTS.com. > We filed with FERC last week and I'm sending you the Wall Street > Journal and > Megawatt Daily articles on it. > > Have you seen any good analytical work on merchant transmission? I'm > in a > dialogue with Paul Joskow and others on this issue but as always would > appreciate your thoughts. > > All the best, > > Ed > > > > Edward N. Krapels, PhD > Director > ESAI Power and Gas Services > tel 781 245 2036 > cell 617 899 4948 > ekrapels@esaibos.com > www.esai.com > > > - winmail.dat << File: winmail.dat >> - winmail.dat << File: winmail.dat >> Message-ID: <27038451.1075863428122.JavaMail.evans@thyme> Date: Tue, 26 Jun 2001 09:10:31 -0700 (PDT) From: j.kaminski@enron.com To: ekrapels@esaibos.com Subject: RE: Neptune -- merchant transmission Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Kaminski, Vince J X-To: 'ekrapels@esaibos.com' X-cc: X-bcc: X-Folder: \VKAMINS (Non-Privileged)\Kaminski, Vince J\Sent Items X-Origin: Kaminski-V X-FileName: VKAMINS (Non-Privileged).pst Ed, I am sure I shall screw up sooner or later (given my aging brain and amount of work). This guy will have to change his name to Ed Krapels to stay employed. Vince -----Original Message----- From: "Edward Krapels" @ENRON [mailto:IMCEANOTES-+22Edward+20Krapels+22+20+3Cekrapels+40esaibos+2Ecom+3E+40ENRON@ENRON.com] Sent: Tuesday, June 26, 2001 11:02 AM To: Kaminski, Vince J Subject: RE: Neptune -- merchant transmission Vince, I think this other guy used to be named John Smith but changed his name to Vince Kaminski to get a job in the power sector! Ed -----Original Message----- From: Kaminski, Vince J [mailto:Vince.J.Kaminski@ENRON.com] Sent: Monday, June 25, 2001 12:38 PM To: ekrapels@esaibos.com Cc: vkaminski@aol.com Subject: RE: Neptune -- merchant transmission Ed, I am still here. Kaminski is a very popular Polish name. My next stage in life, when it happens , is a small cottage close to a beach, not another corporate job. Vince > -----Original Message----- > From: "Edward Krapels" @ENRON > [mailto:IMCEANOTES-+22Edward+20Krapels+22+20+3Cekrapels+40esaibos+2Eco > m+3E+40ENRON@ENRON.com] > Sent: Friday, June 22, 2001 3:08 PM > To: Kaminski, Vince J > Subject: RE: Neptune -- merchant transmission > > Vince, > > Are you still there? I've noticed a Vincent F Kaminski who is manager > of > planning at Alleghany... > > Ed > > > -----Original Message----- > From: Kaminski, Vince J [mailto:Vince.J.Kaminski@ENRON.com] > Sent: Monday, June 04, 2001 12:31 PM > To: ekrapels@esaibos.com > Subject: RE: Neptune -- merchant transmission > > > Hello Ed, > > It sounds very interesting. I forwarded your messages > to two members of my group who work on the problems related > to transmission (a key to the power markets successful > growth). > > I shall share with you their reaction. > > I hope everything is going well. > > Vince > > > > -----Original Message----- > > From: "Edward Krapels" @ENRON > > > [mailto:IMCEANOTES-+22Edward+20Krapels+22+20+3Cekrapels+40esaibos+2Eco > > m+3E+40ENRON@ENRON.com] > > Sent: Friday, June 01, 2001 5:12 AM > > To: Vincent Kaminski \(E-mail\) > > Subject: Neptune -- merchant transmission > > > > Dear Vince, > > > > Greetings from Boston... In the last year, I've been associated with > > the > > Neptune merchant transmission project... check it out at > > www.NeptuneRTS.com. > > We filed with FERC last week and I'm sending you the Wall Street > > Journal and > > Megawatt Daily articles on it. > > > > Have you seen any good analytical work on merchant transmission? I'm > > in a > > dialogue with Paul Joskow and others on this issue but as always > would > > appreciate your thoughts. > > > > All the best, > > > > Ed > > > > > > > > Edward N. Krapels, PhD > > Director > > ESAI Power and Gas Services > > tel 781 245 2036 > > cell 617 899 4948 > > ekrapels@esaibos.com > > www.esai.com > > > > > > - winmail.dat << File: winmail.dat >> > > - winmail.dat << File: winmail.dat >> - winmail.dat << File: winmail.dat >> Message-ID: <13361293.1075863428997.JavaMail.evans@thyme> Date: Thu, 28 Jun 2001 02:05:44 -0700 (PDT) From: j.kaminski@enron.com To: sandeep.kohli@enron.com Subject: RE: Wade Cline Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Kaminski, Vince J X-To: Kohli, Sandeep X-cc: X-bcc: X-Folder: \VKAMINS (Non-Privileged)\Kaminski, Vince J\Sent Items X-Origin: Kaminski-V X-FileName: VKAMINS (Non-Privileged).pst Sandeep, Thanks. Any resolution to Krishna's problem yet? Vince -----Original Message----- From: Kohli, Sandeep Sent: Wednesday, June 27, 2001 7:53 PM To: Kaminski, Vince J Subject: Wade Cline Vince, Wade was in town today and I caught him for lunch. I conveyed your thanks for his efforts with the US Embassy on Krishna's behalf. I also had a disucssion with him on Dabhol, and will give you the details upon return. The gist is that though we are unsure, 90% probability is in the direction of terminating the PPA and arbitrating. Regards, Sandeep.Message-ID: <1842809.1075863429422.JavaMail.evans@thyme> Date: Fri, 29 Jun 2001 10:10:14 -0700 (PDT) From: j.kaminski@enron.com To: eugenio.perez@enron.com Subject: RE: Energy & Power's Financial Mathematics to Energy Derivatives Seminar Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Kaminski, Vince J X-To: Perez, Eugenio X-cc: X-bcc: X-Folder: \VKAMINS (Non-Privileged)\Kaminski, Vince J\Sent Items X-Origin: Kaminski-V X-FileName: VKAMINS (Non-Privileged).pst Eugenio, It's more or less the same. No big changes. Vince -----Original Message----- From: Perez, Eugenio Sent: Friday, June 29, 2001 3:09 PM To: Kaminski, Vince J Subject: Energy & Power's Financial Mathematics to Energy Derivatives Seminar As you remember, I went to the seminar last year. Do you think that it will be different enough this year to make it worthwhile to attend? Andrea and I look forward to seeing you on Monday. Regards, EugenioMessage-ID: <1054751.1075863429466.JavaMail.evans@thyme> Date: Fri, 29 Jun 2001 10:25:13 -0700 (PDT) From: j.kaminski@enron.com To: vkaminski@aol.com Subject: Address for Pfandbrief Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Kaminski, Vince J X-To: 'vkaminski@aol.com' X-cc: X-bcc: X-Folder: \VKAMINS (Non-Privileged)\Kaminski, Vince J\Sent Items X-Origin: Kaminski-V X-FileName: VKAMINS (Non-Privileged).pst http://www.housingfinance.org/Country%20Specific%20Information/country_specific_information.htmMessage-ID: <15202668.1075863429511.JavaMail.evans@thyme> Date: Fri, 29 Jun 2001 10:50:12 -0700 (PDT) From: j.kaminski@enron.com To: vkaminski@aol.com Subject: Cc: vkamins@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: vkamins@enron.com X-From: Kaminski, Vince J X-To: 'vkaminski@aol.com' X-cc: 'vkamins@enron.com' X-bcc: X-Folder: \VKAMINS (Non-Privileged)\Kaminski, Vince J\Sent Items X-Origin: Kaminski-V X-FileName: VKAMINS (Non-Privileged).pst http://www.housingfinance.org/Country%20Specific%20Information/Fact%20book%20(e)%2099.pdfMessage-ID: <5644939.1075863429705.JavaMail.evans@thyme> Date: Mon, 2 Jul 2001 11:23:00 -0700 (PDT) From: j.kaminski@enron.com To: vkaminski@aol.com Subject: http://www.pserc.wisc.edu/index_home.html Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Kaminski, Vince J X-To: 'vkaminski@aol.com' X-cc: X-bcc: X-Folder: \VKAMINS (Non-Privileged)\Kaminski, Vince J\Sent Items X-Origin: Kaminski-V X-FileName: VKAMINS (Non-Privileged).pst http://www.pserc.wisc.edu/index_home.htmlMessage-ID: <12899645.1075863429796.JavaMail.evans@thyme> Date: Mon, 2 Jul 2001 15:39:50 -0700 (PDT) From: j.kaminski@enron.com To: vkaminski@aol.com Subject: http://www.vaionline.it/ Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Kaminski, Vince J X-To: 'vkaminski@aol.com' X-cc: X-bcc: X-Folder: \VKAMINS (Non-Privileged)\Kaminski, Vince J\Sent Items X-Origin: Kaminski-V X-FileName: VKAMINS (Non-Privileged).pst http://www.vaionline.it/Message-ID: <558855.1075863429886.JavaMail.evans@thyme> Date: Tue, 3 Jul 2001 10:49:31 -0700 (PDT) From: j.kaminski@enron.com To: jvidal@riskwaters.com Subject: RE: London, New York, Houston, Financial Mathematics June/July 2001 Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Kaminski, Vince J X-To: '"Joanna Vidal" @ENRON' X-cc: X-bcc: X-Folder: \VKAMINS (Non-Privileged)\Kaminski, Vince J\Sent Items X-Origin: Kaminski-V X-FileName: VKAMINS (Non-Privileged).pst Joanna, You can keep the name as is. I don't want Zimin to be blamed for the flaws of my presentation. Vince -----Original Message----- From: "Joanna Vidal" @ENRON [mailto:IMCEANOTES-+22Joanna+20Vidal+22+20+3Cjvidal+40riskwaters+2Ecom+3E+40ENRON@ENRON.com] Sent: Tuesday, July 03, 2001 10:10 AM To: Kaminski, Vince J Subject: Re: London, New York, Houston, Financial Mathematics June/July 2001 Hello Vince! Hope you are well. Thank you for your presentations. Just one question, would you like me to change the name on the presentations from Vince to Zimin, or should I leave them as is? Please advise. Take care Joanna ----- Original Message ----- From: To: Cc: Sent: Tuesday, July 03, 2001 10:26 AM Subject: RE: London, New York, Houston, Financial Mathematics June/July 2001 > Joanna, > > I am sending you, as promised, the copies of my presentation. > My associate, Zimin Lu, will speak in my place in New York. > > You may want to change the background in the July 9 PowerPoint > presentation for printing (you can do it with one Format/Background/Apply > to All) > command in order to make the copies look nicer. > > Please, confirm the receipt of the message and make sure > you can print the slides and they come out OK. I am leaving for a foreign > trip tomorrow > and it will be difficult to reach me. > > Vince > (See attached file: NY070901.ppt)(See attached file: NY071001.ppt) > > > > -----Original Message----- > From: "Joanna Vidal" @ENRON > [mailto:IMCEANOTES-+22Joanna+20Vidal+22+20+3Cjvidal+40riskwaters+2Ecom+3E+40 ENRON@ENRON.com] > > > Sent: Tuesday, May 15, 2001 3:38 PM > To: ds64@cyrus.andrew.cmu.edu; Geman Helyette; vkamins@enron.com; > kaminski@aol.com; pnance@teknecon.com; > chris.harris@innogy.com; eronn@mail.utexas.edu; > sama@dynegy.com > Subject: Re: London, New York, Houston, Financial Mathematics June/July > 2001 > > > Dear Speakers, > > I understand how awfully busy you must all be at this time, but I would > appreciate a phone call or a quick email to confirm that you ahve or > have not, for that matter received the speaker packets I sent to you > May 2, 2001. please advise as soon as possible, that way, if yo have > not, for whatever received them, I will know what steps to take from > there. > > All the best. > > Sincerely, > > Joanna Vidal > > PS: My contact details are posted below. > > Joanna Vidal > Events Coordinator > Risk Waters Group > T: (212) 925 1864 ext. 197 > F: (212) 925 7585jvidal@riskwaters.com << File: > mailto:jvidal@riskwaters.com >> www.riskwaters.com << File: > http://www.riskwaters.com >> >Message-ID: <9426657.1075863429954.JavaMail.evans@thyme> Date: Tue, 3 Jul 2001 14:19:26 -0700 (PDT) From: j.kaminski@enron.com To: vincek@cs.stanford.edu Subject: address Cc: vkaminski@aol.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: vkaminski@aol.com X-From: Kaminski, Vince J X-To: 'vincek@cs.stanford.edu' X-cc: 'vkaminski@aol.com' X-bcc: X-Folder: \VKAMINS (Non-Privileged)\Kaminski, Vince J\Sent Items X-Origin: Kaminski-V X-FileName: VKAMINS (Non-Privileged).pst JOSEPH KOOTHRAPPALLY (713) 853-6819 jkoothr@enron.comMessage-ID: <6938938.1075863435462.JavaMail.evans@thyme> Date: Fri, 3 Aug 2001 10:50:19 -0700 (PDT) From: j.kaminski@enron.com To: j.kaminski@enron.com Subject: http://www.stanford.edu/~wolak/ Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Kaminski, Vince J X-To: Kaminski, Vince J X-cc: X-bcc: X-Folder: \VKAMINS (Non-Privileged)\Kaminski, Vince J\Sent Items X-Origin: Kaminski-V X-FileName: VKAMINS (Non-Privileged).pst -----Original Message----- From: Kaminski, Vince J Sent: Friday, August 03, 2001 12:46 PM To: Kaminski, Vince J Subject: http://www.stanford.edu/~wolak/Message-ID: <30690957.1075856630953.JavaMail.evans@thyme> Date: Mon, 13 Nov 2000 00:28:00 -0800 (PST) From: wolak@zia.stanford.edu To: vince.j.kaminski@enron.com Subject: Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: "Frank A. Wolak" X-To: Vince.J.Kaminski@enron.com X-cc: X-bcc: X-Folder: \Vincent_Kaminski_Jun2001_5\Notes Folders\Stanford X-Origin: Kaminski-V X-FileName: vkamins.nsf Vince, I'll have him e-mail you a CV. I'd be happy to speak at the POWER RISK conference. Frank Professor Frank A. Wolak email: wolak@zia.stanford.edu Department of Economics Phone: 650-723-3944 (Office) Stanford University FAX: 650-725-5702 Stanford, CA 94305-6072 Phone: 650-856-0109 (Home) World-Wide Web Page: http://www.stanford.edu/~wolak Cell Phone: 650-814-0107Message-ID: <284225.1075857118269.JavaMail.evans@thyme> Date: Thu, 23 Dec 1999 05:56:00 -0800 (PST) From: andrew.lewis@enron.com To: tradeline@netzero.net Subject: Re: Happy Hanukah and Merry Christmas... Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Andrew H Lewis X-To: "Tradeline" X-cc: X-bcc: X-Folder: \Andrew_Lewis_Dec2000\Notes Folders\'sent mail X-Origin: Lewis-A X-FileName: alewis.nsf First of all, Hanukkah was three weeks ago. Second, you spelled it incorrectly. Get a clue, you idiot.Message-ID: <1697917.1075852651136.JavaMail.evans@thyme> Date: Tue, 17 Jul 2001 16:09:15 -0700 (PDT) From: bg8862@aol.com To: jeff.skilling@enron.com Subject: Tom DeLay CA Aug Dinner & Golf event Cc: joannie.williamson@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: joannie.williamson@enron.com X-From: BG8862@aol.com@ENRON X-To: Skilling, Jeff X-cc: Williamson, Joannie X-bcc: X-Folder: \JSKILLIN (Non-Privileged)\Deleted Items X-Origin: Skilling-J X-FileName: JSKILLIN (Non-Privileged).pst Jeff, I spoke to Joannie this afternoon and asked for your e-mail to send this invitation. Here is the initial information on the event. We are expecting additional members of Congress to attend both events. If you have any questions or comment, please let me know. I have attached a word doc. as well: Tom DeLay / ARMPAC Guest Speaker - David Horowitz Four Seasons Aviara - Dinner & Golf Tournament The event will take place: Wednesday, August 15 Four Seasons Aviara (Northern San Diego, CA) Golf Lunch will start at 11am Tee times at 12:15pm An informal reception afterwards Limited to 40 people Cost is $5k per person Dinner Reception 6 to 6:45pm Dinner 7 to 8:30pm Speakers Tom DeLay and David Horowitz $1,500 per person, $2,500 per couple There are four levels of sponsorship: $100K, $50k, $25k and $15k. Contribution levels will also transfer from the dinner and/or Golf Tournament to the ARMPAC "contributor sponsorship program." Bill Gowan Election Day Consulting, LLC 1947 Camino Vida Roble, suite 104 Carlsbad, CA 92009 760 929.1203 electiondayconsulting.com - Aug 15 Golf dinner.doc Message-ID: <16962899.1075852653726.JavaMail.evans@thyme> Date: Tue, 26 Jun 2001 07:21:16 -0700 (PDT) From: brenda_worley@ypo.org To: ios_participants@ypo.org Subject: Inventory of Skills Confidential Inquiry: Joe Jamail Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Brenda_Worley@ypo.org@ENRON X-To: IOS_Participants@ypo.org X-cc: X-bcc: X-Folder: \JSKILLIN (Non-Privileged)\Deleted Items X-Origin: Skilling-J X-FileName: JSKILLIN (Non-Privileged).pst VERY CONFIDENTIAL The following member has asked for help from the Inventory of Skills (IOS). You have been identified as one of the few members who has the skill to assist in this area. You may or may not have completed an IOS enrollment form. All information gathered for IOS is done on a confidential basis and will remain confidential. This member has no knowledge regarding who has been contacted. If you choose to help, the necessary information follows so that you may contact this member directly. If you cannot assist this member, please contact them or IOS. IOS asks that you please respond within 72 hours of receiving this request. Thank you, Brenda Worley IOS does not evaluate the validity of any request. *************************************************************************************************** Name: Ted L. "Dub" Snider Jr. Chapter: Lone Star-Dallas Phone: 501-401-7601 Fax: 501-401-7628 Email: dsnider@connect.com Other: * Indicated preferred method of contact. My company has been severely damaged by $50 billion (revenues)Texas based company 1) refusal to pay monies owed under a contract. 2) misrepresenting information used to calculate amounts owed under the contract 3) appears to have instigated an FBI investigation of our company regarding a pending civil and regulatory dispute. I am looking for an introduction to Joe Jamail by someone who knows him. We need an attorney with the courage, confidence, and track record to successfully pursue our claim against a powerful adversary. Thank You. **************************************************************************************************Message-ID: <19542708.1075852654573.JavaMail.evans@thyme> Date: Wed, 20 Jun 2001 12:02:00 -0700 (PDT) From: kevinscott@onlinemailbox.net To: kean.steve@enron.com, jeff.skilling@enron.com Subject: Public Policy Contacts for California Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Kevin Scott @ENRON X-To: Steve Kean , Skilling, Jeff X-cc: X-bcc: X-Folder: \JSKILLIN (Non-Privileged)\Deleted Items X-Origin: Skilling-J X-FileName: JSKILLIN (Non-Privileged).pst Jeff and Steve As you requested, I have prepared a list of my preferred public policy contacts for California. It is composed of professionals from an array of public, private and non-profit backgrounds. I have worked in some capacity with each of these people and most I know quite well. Please call me for further background. Kevin 213-926-2626 Attachment - Kevin Scott - Preferred Contacts - 6-20-01.doc