Please see the following articles:

Sac Bee, Wed, 5/30:  Bush-Davis standoff: President still refuses price caps;
governor may sue

Sac Bee, Wed, 5/30:  PG&E ratepayers battle for voice

Sac Bee, Wed, 5/30:  Dan Walters: Blame-game politics take center stage in
California's energy drama

Sac Bee, Wed, 5/30:  State loses round in FERC fight: Legislators and Oakland
will file an appeal to the full 9th Circuit to force energy price caps

Sac Bee, Tues, 5/29:  Wattage Watch
Determination, conservation pay off in lower energy bills

Sac Bee (AP), Tues, 5/29:  Appeals court declines to order energy price caps

LA Times, Wed, 5/30:  Bush, Davis Collide Over Energy Policy

LA Times, Wed, 5/30:  Power Plant Start-Up Comes a Year Early

LA Times, Wed, 5/30:  Stop Finger-Pointing and Start Negotiating
(Commentary)

LA Times, Wed, 5/30: Bush Isn't Budging, but He Needs to Turn FERC Around
(Commentary)

SF Chron, Wed, 5/30:  THE ENERGY CRUNCH
Bush, Davis fail to settle dispute
President travels to state but won't budge on rate caps

SF Chron, Wed, 5/30:  Davis' canny use of media manages to upstage Bush

SF Chron, Wed, 5/30:  Democrats sponsor energy talks/ Bush still at odds with
call for
federal support of conservation

SF Chron (AP), Wed, 5/30:  Appeals court declines to order energy price caps
as California
threatens to sue federal government

Mercury News, Wed, 5/30:  President unmoved by Governor's appeal for relief
(Enron mentioned)

Mercury News, Wed, 5/30:  Davis-Bush meeting falls short of full truth

Mercury News, Wed, 5/30:  Farm influence sways state power policy

Mercury News, Wed, 5/30:  No help  (Editorial)

OC Register, Wed, 5/30:  Bush: No price caps

OC Register, Wed, 5/30:  A day of spin over substance

Individual.com (Businesswire), Wed, 5/30:  PG&E Comments On Federal Plan to
Expand Path 15

NY Times, Wed, 5/30:  Chilly Encounter in California   (Editorial)

Chicago Tribune, Wed, 5/30:  Bush, Gov. Davis sound like Texas, California on
energy

SF Chron (AP), Wed,5/30:  Bush's visit to California draws protest over energy

SF Chron (AP), Wed, 5/30:  P-G-and-E asks court for permission to pay $17.5
million in bonuses

SF Chron (AP), Wed, 5/30:  Developments in California energy crisis

SF Chron, Wed, 5/30:  PG&E wants OK to double top executives' pay
Court asked to approve $17 million in bonuses

SF Chron, Wed, 5/30:  Davis threatens to sue regulators to get price limits

------------------------------------------------------------------------------
--------------------------------------------

Bush-Davis standoff: President still refuses price caps; governor may sue
By Laura Mecoy
Bee Los Angeles Bureau
(Published May 30, 2001)
LOS ANGELES -- President Bush and Gov. Gray Davis met face to face Tuesday
but didn't see eye to eye on the issue of imposing caps on wholesale
electricity prices.
The Republican president reiterated his opposition to price caps in a speech
delivered before the two even met and called for an end to "pointing fingers"
and "blame shifting."
The Democratic governor emerged from the 35-minute, closed-door meeting
"disappointed" by Bush's opposition to the price caps he sought and vowed to
sue the Federal Energy Regulatory Commission for relief.
"I explained to the president that if he were governor he, like I, would be
doing everything in his power to fight for the 34 million people in
California who are getting a raw deal," Davis said.
The standoff was expected. But the meeting drew extraordinary attention,
because Bush and Davis are considered potential rivals for the presidency in
2004 and because much is at stake for both of them.
Bush has come under fire for being indifferent to California's energy woes,
and Davis' poll standings plummeted as electricity bills rose.
With Davis sitting just two seats away, Bush told the Los Angeles World
Affairs Council that conservation and increasing supply are the solution to
California's energy problems -- rather than price caps.
"Price caps do nothing to reduce demand," he said. "And they do nothing to
increase supply."
Bush said price caps may sound appealing to those struggling to pay expensive
electricity bills but warned that they would lead to more serious shortages
and higher prices.
Three protesters rose from the audience to wave signs and shout support for
price caps. But Bush forged ahead.
He graciously welcomed Davis, then subtly attacked the governor for his
recent criticism of Bush's energy plan.
"For too long, too often, too many have wasted energy, pointing fingers and
laying blame," the president said. "Energy is a problem that requires action
-- not politics, not excuses, but action. Blame shifting is not action. It's
a distraction."
Davis said he doesn't blame Bush for the state's energy woes. But he said the
president is "uniquely situated to bring us price relief."
He said he will sue FERC to force it to "discharge its legal obligations" by
imposing price caps or ordering substantial refunds.
A three-judge panel of the 9th U.S. Circuit Court of Appeals on Tuesday
rejected a similar lawsuit filed on behalf of the Legislature and the city of
Oakland.
The panel offered little explanation for its decision. But Davis said the
lawmakers hadn't allowed federal regulators to fully review the case before
taking it to the courts. He said his office filed the paperwork on Friday to
begin the federal review process.
He said Bush did promise his first FERC appointee, Pat Wood, will come to
California to examine why the state pays three times more than New York for
Texas natural gas.
This was the president's first trip to California since he lost the state's
54 electoral votes to Democrat Al Gore in November.
Democrats have attacked Bush for visiting 29 other states before returning to
California, and some Republicans said his absence could harm GOP House
members facing tough re-election campaigns.
On Tuesday, Bush campaigned aggressively for his national energy plan, and
the governor tried to match him with his own series of events.
The president began his day at Camp Pendleton, highlighting the federal
government's energy conservation program. He announced he would seek $150
million more to help low-income Americans pay energy bills this summer.
He also touted a Department of Energy plan to stimulate the building of more
transmission lines between Northern and Southern California.
As he took a helicopter back to Los Angeles, Davis held a news conference
featuring San Diego ratepayers whose bills have risen more than elsewhere in
the state because they were the first to feel the effects of deregulation.
"The impact is just disastrous," Michael Brunker, Jackie Robinson Family YMCA
director, told reporters.
Frank and Gladys Cannon, a retired West Covina couple, also described their
fear of losing the power needed to fuel the oxygen generator Gladys relies on
to breathe because of her emphysema.
Outside the hotel where Bush and Davis spoke, about 150 protesters waved
signs and chanted slogans, attacking Bush's energy plan and supporting price
caps.
After the president's speech, a group of California business leaders who met
privately with Bush voiced support for conservation and opposition to price
caps.
Then Davis held his news conference, where he claimed spiraling energy costs
could trigger a California recession that would "drag down the national
economy."
Minutes later, Bush's top political aide, Karl Rove, and the state chairman
of Bush's California presidential campaign, Gerald Parsky, held their own
briefing.
"The president believes price caps will make California's economy weaker, not
stronger," Rove declared.
Bush then boarded Air Force One to fly to Fresno for a dinner meeting and an
appearance today at Sequoia National Park.

The Bee's Laura Mecoy can be reached at (310) 546-5860 or lmecoy@sacbee.com.

PG&E ratepayers battle for voice
By Claire Cooper
Bee Staff Writer
(Published May 30, 2001)
SAN FRANCISCO -- Saying Pacific Gas and Electric Co.'s customers have
billions of dollars in potential claims against the utility, the U.S. trustee
on Tuesday urged U.S. Bankruptcy Court Judge Dennis Montali to reconsider his
decision denying them an official voice in bankruptcy proceedings.
PG&E failed to meet its "public utility obligation," causing "massive
economic losses" that will be passed on to ratepayers to pay for high-priced
electricity, said trustee Linda Ekstrom Stanley, the bankruptcy court's
administrator.
A hearing was set tentatively for July 5 on Stanley's reconsideration motion
and a separate one filed by the ratepayers' committee that she appointed May
4 and Montali disbanded two weeks later. Montali said bankruptcy proceedings
are meant to resolve problems between a debtor and its creditors, not
customers.
In its motion, the committee said ratepayers also are PG&E creditors, but not
the kind who can count on the official committee of creditors for
representation. That committee includes financial institutions and energy
companies owed money by PG&E.
"If ratepayers are shut out of this case, we fear that they will end up
paying an even higher price for the state's energy crisis," said Nettie Hoge,
vice chair of the ratepayers' committee.
A spokeswoman for state Attorney General Bill Lockyer said he supports
reconsideration. PG&E and the creditors' committee oppose it.
The San Francisco-based utility said it would not object to hearing
ratepayers "when issues arise where they have standing."
The creditors' committee said the appropriate forum for ratepayers is the
Public Utilities Commission or the legislature.
The nine-member ratepayers' committee was drawn from organizations
representing the utility's residential and business customers. If Montali
recognizes it as an official committee, it will have access to all data and
the right to hire investigators and lawyers at the utility's expense.

The Bee's Claire Cooper can be reached at (415) 551-7701 or
ccooper@sacbee.com.

Dan Walters: Blame-game politics take center stage in California's energy
drama

(Published May 30, 2001)
The energy crisis that poses such a threat to Californians' pocketbooks,
peace of mind and even their lives is a melange of economic, technological
and political factors that interact with one another in ways that defy
prediction or sometimes even comprehension.
Nevertheless, the politicians who purport to manage the crisis and
journalists tend to treat it as a serial situation, rather than an
ever-mutating composite. At one moment, everyone focuses on the threat or
reality of blackouts, but a day or two later, the financial plight of the
private utilities, some new power price conflict or the huge drain on the
state treasury dominates the collective consciousness. It stems, one
suspects, from the fundamental nature of politicians and journalists.
This week, while other, and perhaps more important, aspects of the crisis get
short shrift, those involved in framing the situation are preoccupied with
just one matter: the political face-off between Gov. Gray Davis and President
Bush over whether the Bush-controlled Federal Energy Regulatory Commission
should impose some form of wholesale power price relief.
The Republican president paid his first visit to the state and, after some
negotiations over protocol, agreed to a brief personal meeting with the
Democratic governor, who has been stopping just short of accusing Bush of
resisting price caps so that his pals in Texas energy companies can line
their pockets. Other Democrats have been more explicit in that allegation --
in ads attacking Republican members of Congress in the state, for example.
It was very evident in advance that Bush would reject price controls. His
aides had made that clear in pre-visit discussions with reporters, and in two
public appearances before sitting down with Davis in Los Angeles, Bush said
it again.
Bush told one Los Angeles audience -- with Davis sitting nearby -- that
"price caps do nothing to reduce demand, and they do nothing to increase
supply," adding that in the long run, price controls create "more serious
shortages and, therefore, even higher prices."
Davis was, of course, undeterred in his quest for price caps that, if
implemented, would remove some of the pressure on him to come up with enough
money to pay California's soaring power bills. While eschewing any overtly
partisan rhetoric and carefully thanking Bush for meeting with him and taking
some steps to relieve California's energy woes, Davis said they have "a
fundamental disagreement over whether California is entitled to price relief
... as a matter of law."
Davis and other California political leaders contend that FERC has shirked
its responsibility to intercede in dysfunctional energy markets, and Davis
said he would sue the agency to force it to act, even though a federal
appellate court panel earlier Tuesday tossed out as premature one suit filed
by state legislative leaders.
The debate over whether FERC is legally obligated to intercede, or whether a
price cap would relieve California's energy problems, will thus continue, but
unless the agency is prepared to defy the White House or the courts order it
to act, federal price controls are unlikely to be imposed anytime soon, if
ever. All of Tuesday's tightly choreographed private and public moves,
therefore, probably will have no effect on the crisis itself, which continues
to worsen by the minute as summer's heat and the prospect of soaring power
demand draws closer.
It was simply politics -- Bush making sympathetic noises to a state he lost
by a million votes last year but refusing to intercede directly, and Davis
trying to shift the political onus for the crisis that has already driven his
approval ratings down markedly and threatens his re-election.
"Blame-shifting is not action," Bush told one audience Tuesday in a pointed
reference to Davis' anti-Bush and anti-Texas rhetoric of the past few weeks.
"It is distraction." But Bush aides are also busily pointing the finger of
blame at Davis for not acting more aggressively when the crisis first began
to appear a year ago. Vice President Dick Cheney recently labeled Davis'
actions, particularly the heavy state purchases of power, as "harebrained."

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

State loses round in FERC fight: Legislators and Oakland will file an appeal
to the full 9th Circuit to force energy price caps.
By Emily Bazar
Bee Capitol Bureau
(Published May 30, 2001)
Exactly one week after California lawmakers filed suit, an appeals court
Tuesday declined to force federal regulators to cap the price of wholesale
energy.
With scant explanation, a three-judge panel of the 9th U.S. Circuit Court of
Appeals rejected the lawsuit that was filed on behalf of the Legislature and
the city of Oakland last week, saying: "Petitioners have not demonstrated
that this case warrants the intervention of this court."
Throughout the energy crisis, state leaders have complained that the Federal
Energy Regulatory Commission has shirked its duty under the Federal Power Act
to set "just and reasonable" wholesale electricity prices.
In their lawsuit, Assembly Speaker Robert Hertzberg and Senate President Pro
Tem John Burton -- both Democrats -- asked the court to order FERC to impose
price caps and to provide refunds for past purchases. Calling the situation
an emergency, they requested a hearing within 21 days.
Attorney Joseph Cotchett, who represents the Legislature in the case, said
the judges -- Alex Kozinski, Ferdinand Fernandez and Kim Wardlaw, all of
Pasadena -- weren't convinced the matter was pressing.
"I find it very difficult to understand how this is not an emergency based
upon the crisis we're presently facing in California," Cotchett said.
"Obviously, this is a matter of great urgency and we're going to have to take
the longer route of filing a formal petition."
Cotchett said he plans to file an appeal by Friday, and hopes to convince the
full panel of 9th Circuit judges that the situation qualifies as an
emergency.
Hertzberg said he will continue to press FERC to limit what power companies
can charge for electricity. On Tuesday, he petitioned FERC to reconsider its
month-old plan to limit prices during emergencies.
Hertzberg said the plan, which went into effect Tuesday, is riddled with
legal errors and could lead to higher rather than lower prices, and called on
the federal panel to impose stricter price controls.
"We have an obligation to do everything humanly possible that we can," said
Hertzberg, of Sherman Oaks. "This is not about anything less than a
dysfunctional market, period."

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

Wattage watch

Determination, conservation pay off in lower energy bills
By David E. Graham
UNION-TRIBUNE STAFF WRITER
May 29, 2001
For Dan Russell, incandescent light bulbs with their century-old design are a
thing of memory. In their place in his Middletown home are those
pigtail-shaped fluorescent bulbs.
The retired San Diego firefighter washes clothes by giving them a good
scrubbing by hand in a plastic bucket with cold water and soap. A line in the
back yard holds clothes for air drying, a scene more familiar in photographs
from the Great Depression.
His refrigerator is new, but only because it is many times more
energy-efficient than the 17-year-old model he had before.

And his bill for the 143 kilowatt-hours of power he used in his
1,900-square-foot home last month was $18.33.
"Saving energy is my hobby," Russell, 58, said recently after he had climbed
down from his attic, where he had been adding insulation to conserve further.
Russell is among those San Diegans who, confronting soaring electrical rates
and diminished statewide energy supplies, have taken the call to conservation
to heart. Like other super conservers, he has scoured over the way he uses
electricity in his house and has cut back. Then, he trimmed some more.
Russell's electrical usage last month was down almost to half the 280
kilowatt-hours he had used a year earlier, and he is looking forward to the
rebate Gov. Gray Davis is offering San Diego County residents this summer.
Residential customers who use an average of at least 15 percent less energy
from June through September than they did those same four months last year
qualify for a 20 percent rebate on those four bills.
The governor is hoping such reductions could go "a long way" toward reducing
projected blackouts during peak demand periods this summer, said Davis
spokesman Roger Salazar.
Energy super-savers say a combination of changes are key to reducing energy
usage, but the essence of conservation involves using only what is genuinely
needed, finding more efficient appliances and developing alternate ways of
doing some tasks -- such as hand-washing clothes or dishes.
Seeing the worsening energy crisis, Denice and Jeremy Riddle of El Cajon and
their two daughters became super cutters, reducing their consumption by
two-thirds after they received a February bill for $208 on 976
kilowatt-hours.
"We had a family meeting," Denice Riddle said. "We're not going to pay that
anymore."
The Riddles have installed motion sensors in their 1,200-square-foot home so
that lights remain on only when they or their daughters, 9 and 4, are in a
room. The children no longer wear different outfits throughout the day, and
clean laundry dries outside on a line with only a couple minutes in the dryer
to add softness.
They wash dishes by hand. The dishwasher is going to be removed to make space
for more cabinets.
"I know what we're doing is working," she said.
Her last bill was $110 for 532 kilowatt-hours of power, a significant
reduction. That amount is close to the 500 kilowatt-hours that SDG&E
considers the average monthly usage for residential customers. And the
Riddles are not finished.
The Riddles added a small bank of solar panels that directly power their
freezer, a security measure during blackouts. A Jacuzzi still takes some
power, as does a swimming pool pump. Yet the Riddles say they plan to add
more solar to provide even more of the home's power.
"We're going to have a $5 electricity bill, eventually," Denice Riddle said.
While rigorous, neither Russell nor the Riddle family is fanatical in their
pursuit. They go about most typical activities of personal and home
maintenance in Southern California life. It is just that they do it with a
stingy discipline.
"It can be done," Russell said.
He was filled with excitement last week when on a trip to Olympia, Wash., he
bought a more energy-efficient television that he calculates will save seven
more kilowatt hours a month. He hopes that amount will help offset what he
figures his wife "wastes" each month by switching on lights he considers
unnecessary.
Russell also benefits by having some appliances that burn natural gas. His
combined electrical and gas energy bill last month was $33.47.
Russell has so immersed himself in the conservation pursuit that -- as he
goes about his life -- he lobbies managers of hotels, government offices and
businesses to conserve what he considers waste.
He sent a visiting friend home to Idaho with a compact fluorescent bulb, the
new type with the distinctively curled, pigtailed tube, so the friend could
start conservation practices there.
There is another incentive for energy super-savers, too. People who use no
more than 130 percent of the monthly baseline electricity allowance, the
amount considered a household minimum, can avoid any new rate increases.
A San Diego Gas & Electric spokesman said most county residents typically
have a baseline in summer of 298 kilowatt hours, if their households
utilities are all electric, and 130 percent of that would be about 387. For
households that also use natural gas, the baseline is typically 252 kilowatt
hours, and 130 percent of that is about 327 kilowatt hours.
In mountain and desert areas, the baseline amounts are significantly higher.
Russell has carried his energy hobby into a family competition with
brother-in-law David Rock, who lives in an El Cajon apartment with his
21-year-old daughter and 19-year-old son. Rock managed to scrape by last
month on 258 kilowatt-hours of energy for $33.17.
He is looking forward to qualifying for the governor's 20 percent payment
rebate this summer.
The family doesn't watch much television and uses the computer sparingly,
mostly for homework, he said. They are stingy with lighting, do not use a
dishwasher and wash clothes in a bank of shared machines at the apartment
complex.
Rock and Russell both fear that summer's heat may corrode their best
conservation intentions.
"August and September will be a challenge," even the flinty Russell said.
Rock will use a ceiling fan and set the thermostat at a "comfortable" 80
degrees, he said. Russell also uses a ceiling fan and blinds to cool the
house while avoiding air conditioning.
Still, Rock is quick to add that conservation has its limits: "I'm not going
to do my laundry in a bucket."

Abraham blames transmission bottlenecks for blackouts, prices

By Jim Fitzgerald
ASSOCIATED PRESS
May 29, 2001
YONKERS, N.Y. ) Blackouts in California and high energy prices in
metropolitan New York are both due to transmission bottlenecks rather than
short supply, Energy Secretary Spencer Abraham said Tuesday.
"If we remove transmission constraints across the country like those in
California and those present here in New York, the result would be lower
prices and improved reliability," Abraham said.
Speaking at a Consolidated Edison substation in Yonkers that routes power
south to New York City, Abraham said, "This is a superb facility, but we need
more like it." He said "incentive rates" should be offered to spur the
construction of transmission infrastructure.
Currently, he said, "It's impossible to ship electricity from the East Coast
to the West Coast. Many countries have national grids. America does not."
Abraham's appearance was part of a tour promoting President Bush's national
energy policy. Bush was in Los Angeles, announcing an aid package for
low-income Californians caught in the energy squeeze.
Suggesting that blackouts are likely again this summer in California, Abraham
said most of the past year's blackouts there "are the result of a
transmission bottleneck ... that prevents power in Southern California from
moving to northern California."
He said that on Monday, he directed the Western Area Power Administration, a
federal electricity utility, "to take the first steps toward building a
90-mile transmission line to remove these ... transmission bottlenecks."
Abraham said blackouts are not likely in New York this year but warned that
bottlenecks similar to California's keep the power-hungry New York City area
from receiving supply from power-rich areas to the north and west.
"There's an ample supply of energy in this state but transmission constraints
and bottlenecks limit the ability to transfer that electricity to places
where it's needed," he said.
And he said the Bush administration wants to win the power to decide where
new transmission lines should go. Noting that Connecticut had recently
rejected a transmission line that would have brought much-needed power from
New England to Long Island, he said, "The transmission grid is the interstate
highway system for electricity. It should not be a series of local toll
roads."
Under current law, transmission siting is left to the states. Abraham said
that was because when that system was set up in 1935, "Congress did not
perceive the transmission system which would develop ) one which is not only
interstate but also international."
Bill Museler, president of the New York Independent System Operator, which
coordinates utilities' power supplies and needs, agreed with Abraham, saying,
constraints on transmission "can not only cause reliability problems but they
are also one of the major reasons why prices in southeast New York,
particularly New York City, are higher" than upstate or in nearby states.

Appeals court declines to order energy price caps

By David Kravets
ASSOCIATED PRESS
May 29, 2001
SAN FRANCISCO ) A federal appeals court declined Tuesday to order federal
energy regulators to cap wholesale electricity prices.
The decision by a three-judge panel of the 9th U.S. Circuit Court of Appeals
came hours before California Gov. Gray Davis was to urge President Bush in
Century City to cap wholesale power costs, which have been spiraling out of
control.
The panel, in a brief statement, said last week's appeal by state Senate
President John Burton and state Assembly Speaker Robert Hertzberg does not
warrant "intervention of this court."
The lawmakers, both Democrats, were joined by the city of Oakland in their
appeal to the 9th Circuit.
"The citizens of California are suffering immediate irreparable harm as a
result of FERC's abrogation of its duty to establish just and reasonable
rates for electricity," they wrote to the 9th Circuit, which has jurisdiction
over FERC.
The lawmakers said California's looming threat of continued blackouts "are an
imminent threat to the health, welfare and safety of every California
citizen."
The suit came after more than a year of wholesale power prices reaching
historically high levels. In December, prices in California reached $200 per
megawatt hour ) and they have skyrocketed to as much as $1,900 per megawatt
hour during peak times since then.
The Bush administration ardently opposes price caps and President Bush has
declined Davis' requests to urge FERC to impose strict caps.
Vice President Dick Cheney, chief architect of the administration's energy
plan, has said capping prices would not increase energy supplies or reduce
demand.
"We get politicians who want to go out and blame somebody and allege there is
some kind of conspiracy ... instead of dealing with the real issues," Cheney
has said.
Cheney criticized Davis, a Democrat, for what he called a "harebrained
scheme" to use the state's budget surplus to buy power because California's
two largest utilities face enormous financial problems.
For the short term, the Bush administration has approved Davis' request to
expedite permits for new power plants and has ordered federal facilities in
California to reduce energy consumption 10 percent this summer.
Sacramento and the White House appear locked in a high-voltage war of
rhetoric over energy policies. There is broad bipartisan dissatisfaction in
Sacramento with Washington's response to California's energy crisis ) the
result of its own 1996 deregulation rules.
Last month FERC did order a one-year cap on electricity sold into California
during power emergencies, when power reserves fall below 7 1/2 percent. The
agency did not set a price and also required the state to join a regional
transmission organization, which could limit California's ability to control
its own power grid.
Davis called the plan a "Trojan horse," and state power regulators dismissed
the cap as inadequate, saying it would profit power generators at ratepayers'
expense.
In addition, Davis and state lawmakers sharply criticized FERC for
considering requiring the state's power grid operator to add a surcharge on
power sales to pay generators the money they are owed by the state's two
large financially strapped utilities.
The case is Burton v. Federal Energy Regulatory Commission, 01-70812.

Bush, Davis Collide Over Energy Policy
Politics: At summit with governor, president continues to oppose electricity
price caps.

By JAMES GERSTENZANG and DAN MORAIN, Times Staff Writers

President Bush greets Gov. Gray Davis. "We have an agreement to disagree, but
it is a big disagreement," Davis said of Bush.
CAROLYN COLE / Los Angeles Times

?????President Bush, venturing into California for the first time as
president, stood firm Tuesday in his opposition to reining in wholesale
electricity prices, prompting Gov. Gray Davis to announce that he likely will
sue federal energy regulators within a month.
?????In their much-anticipated private summit, Bush met with Davis for nearly
40 minutes in what was characterized afterward as a cordial, businesslike
session. Davis said Bush offered little to help with California's energy
crisis, while Bush's aides said Davis' prescription would worsen the state's
woes.
?????"He just listened and said he is against price caps," Davis said.
?????For his part, the president said in a midday speech to the World Affairs
Council in Century City: "My administration will continue to work to help
California through the difficult months ahead."
?????The president's first full day in California consisted largely of
appearances before friendly audiences. The only discord came at the World
Affairs Council luncheon, where three hecklers disrupted his otherwise
well-received speech on energy and the economy, and a few dozen protesters
gathered outside the Century City hotel.
?????Davis toned down his harsh rhetoric of recent days, praising Bush for
speeding up the process by which the federal government grants permits to new
power plants.
?????The governor said Bush agreed to begin looking into natural gas
prices--a step that Davis praised. Natural gas, which fuels virtually all new
power plants being built in California and many of the old ones, costs
roughly three times more in California than in New York.
?????The big disagreement remains over the wholesale cost of electricity. The
state spent $7 billion on electricity in 1999. The cost could skyrocket to
$50 billion this year.
?????"We have an agreement to disagree, but it is a big disagreement," Davis
said.
?????The Davis administration has appealed to the Federal Energy Regulatory
Commission to impose some type of price controls on electricity. Davis said
he expects to sue within a month, if the federal commission turns down the
state's latest petition, which was filed Friday. Also Tuesday, a federal
appeals court rejected a lawsuit by state legislative leaders to force
Washington energy regulators to cap electricity prices in California.
?????"I'm going to pursue every recourse possible to me," Davis said, adding
that he also will press his case on behalf of California and other Western
states with the newly Democrat-controlled U.S. Senate.
?????The Bush-Davis meeting was almost twice as long as the 20 minutes
allotted on the president's public schedule. On his first visit to the
nation's most populous state since taking office four months ago, Bush came
face to face throughout the day with the reality of the energy crisis and its
potential for dragging down the economy of California and the nation.

?????'Price Caps Now,' Heckler Tells Bush
?????Bush was thrust into the controversy that the crisis has engendered: At
the luncheon speech, one woman stood up and shouted, "Price caps now!" and
"Stop the greedy generators!" As she was slowly led out, two other women
echoed her cries, including one who stated primly, "Excuse me, Mr. Bush, we
need price caps."
?????Medea Benjamin, a California Green Party candidate for the U.S. Senate
last year, was one of the three women ushered out.
?????Benjamin and 79-year-old Ceil Sorensen were unfurling a banner inside
the hotel when they were ushered out, said Donna J. Warren, a Green Party
candidate for the 32nd Congressional District seat. The women were released
within 30 minutes, Warren said. The president continued his speech, making no
reference to the interruptions.
?????Meanwhile, a group of economists--among them aides to former President
Reagan and to Bush's father--sent Bush a letter opposing price caps,
countering another letter from economists delivered by Davis supporting
temporary steps to stabilize California's electricity market.
?????The president, sounding defensive after coming under attack in a state
in which he faces wide skepticism about his policies and his poll numbers are
drooping, said in an apparent slap at Davis:
?????"For too long, too often, too many have wasted energy, pointing fingers
and laying blame. Energy is a problem that requires action, not politics, not
excuses but action. Blame shifting is not action, it's a distraction."
?????Bush's day began at dawn in Los Angeles. He flew to Camp Pendleton,
where Marines demonstrated their energy conservation efforts. Speaking to an
assembly of Marines in front of the 1st Marine Division headquarters, Bush
was cheered and greeted with several throaty chants of "hoo-aah" from the
approving leathernecks.
?????After the speech in Los Angeles, he took part in a meeting on energy
efficiency and then met with the governor. At the end of the day, he flew to
Fresno, for a visit today to Sequoia National Park.
?????Andrew H. Card Jr., Bush's chief of staff, said after the meeting with
Davis: "It was a very, very friendly and constructive conversation." Davis
described the session as cordial and businesslike.
?????Card said that the two found areas in which they agreed to disagree, but
that there were more areas of agreement.
?????Card also said Bush told Davis that he had asked Pat Wood, a power
utility official in Texas whom he has named to the Federal Energy Regulatory
Commission, to visit with the governor to explore the state's energy problems.
?????The day had the feel of two intersecting political campaigns.
?????Bush tried to show that he cared about California's woes; Davis
surrounded himself with "real Californians," including three young children.
The group was handpicked by the governor's aides to illustrate the effect of
rising electricity bills.
?????"I had hoped [Bush] might have been able to hear the stories directly,"
Davis said before his private meeting with the president. He sat on a couch
on the 19th floor of the Century Plaza, with three young children, and
listened to their parents and others discuss their worries about rising bills
and fears about blackouts.
?????Linking a thriving economy to a reliable, affordable energy supply, Bush
said all his work on energy would be guided by this test: "Will any action
increase supply at fair and reasonable prices? Will it decrease demand in
equitable ways? Anything that meets that test will alleviate the shortage,
and we will move swiftly to adopt it.
?????"Price caps do nothing to reduce demand, and they do nothing to increase
supply," he said, adding that the Clinton administration also opposed such
restrictions.
?????He said they may sound appealing "at first blush for those struggling to
pay high energy" bills, but they would bring "more serious shortages."
Critics of price caps argue that they would make production of energy
uneconomical and thus discourage exploration for new sources of oil and gas.
?????In a nod to concerns that energy companies are taking advantage of the
shortages, Bush said the federal government "takes very seriously our
responsibility to make sure that companies are not illegally gouging
consumers."

?????Energy Problems Detailed to Media
?????To the surprise of no one in the Davis administration, Bush did not
adjust his schedule to listen to Davis' Californians with energy problems.
?????So Davis held a news conference where they could tell their stories,
then appeared with them in interviews with reporters from national television
networks.
?????"I'm surprised [Bush] wouldn't meet with this group, and I'm surprised
he's only giving the governor 20 minutes," said Gladys Cannon, 75, who has
emphysema. "What can you do in 20 minutes, other than say, 'No.' "
?????Cannon and her husband, Frank, told the governor that they are "on the
edge," living on fixed incomes, and said they fear the effects of blackouts
on her respirator. The West Covina woman said she has long been a Davis
campaign volunteer.
?????Gabriel and Christine Rodriguez, owners of Chiquita's Mexican Restaurant
in San Diego, came with their three children, ages 4, 6 and 9, and said they
can't make charitable donations or fill job openings because they are
struggling to pay utility bills that have nearly tripled. Christine Rodriguez
works for San Diego City Councilman Scott Peters.
?????Meanwhile, in San Francisco, a three-judge panel of the U.S. 9th Court
of Appeals dismissed an urgent suit by Senate leader John Burton and Assembly
Speaker Bob Hertzberg, declining to intervene in the growing
Washington-California tussle over the energy crisis.
?????The suit alleged that Californians were suffering "irreparable harm" due
to the failure of the Federal Energy Regulatory Commission to fulfill its
duty and establish "just and reasonable" wholesale electricity rates. As a
result, the suit alleged, the health and safety of Californians were being
threatened by frequent power outages.
?????In rejecting the suit, the judges said the petitioners--Burton (D-San
Francisco), Hertzberg (D-Sherman Oaks) and the city of Oakland--"have not
demonstrated that this case warrants the intervention of this court."
?????Burton and Hertzberg are conferring with their attorneys and have not
decided whether to appeal the ruling to the U.S. Supreme Court.
?????Although the Democratic officeholders failed to persuade the court to
force the hand of the federal regulators, a parallel effort to accomplish the
same goal is still moving forward.
?????The California Assembly has directly petitioned the regulatory
commission to reconsider an April 26 order that called for limited price
controls in the West during power emergencies this summer.
?????Davis and other state leaders have blasted the order, saying it is full
of loopholes and will do little to stop what they consider blatant price
gouging by electricity traders.
?????"California still needs real relief, not the smoke screen federal
regulators have offered so far," Hertzberg said. "The bottom line is that the
commission has failed to do its job, which is to protect Californians from
runaway wholesale electricity prices."
---
?????Times political writer Mark Z. Barabak and staff writer Miguel Bustillo
contributed to this story.

Copyright 2001 Los Angeles Times

Power Plant Start-Up Comes a Year Early
Energy: The MWD hydroelectric facility is the state's first new one in six
years, just in time for summer crisis.

By TONY PERRY, Times Staff Writer

?????A year earlier than initially planned, the Metropolitan Water District
of Southern California will begin producing electricity today at its mammoth
reservoir near Hemet in Riverside County.
?????Four turbines at MWD's Diamond Valley Lake reservoir will produce about
13 megawatts of electricity--enough for about 9,750 homes.
?????The move comes as the state approaches a summer for which energy
officials have predicted rolling blackouts.
?????"In this crisis, every kilowatt counts," said Ronald Gastelum, MWD
general manager.
?????For anyone looking for a microcosm of what the energy crisis has done to
change California's thinking, the four roaring turbines at Diamond Valley
Lake are a good place to start.
?????For openers, the California Energy Commission says the power plant at
the Hiram J. Wadsworth Pumping Plant is the first new California
hydroelectric facility in six years--a period during which demand was
increasing and supply remained static.
?????Also, the hydroelectric turbines were not part of the original design of
the $2-billion reservoir. "There was plenty of power in the state," Gastelum
said. "Hydroelectric was not a priority."
?????But as the state tumbled into energy disarray, the MWD board voted to
retrofit some of the reservoir's pumps to produce electricity.
?????If all 12 pumps are altered to act as power generators--at a cost of
about $4.5 million--the output will be about 40 megawatts, enough for 30,000
homes.
?????Opened in March 2000, the Diamond Valley reservoir is scheduled to hold
800,000 acre-feet of water when full. Energy will be generated by running
water through the turbines before it is sent either to Riverside County
agencies or south to its largest customer, the San Diego County Water
Authority.
?????The MWD also is considering how to upgrade its transmission lines to
draw more electricity from existing hydroelectric plants at Hoover and Parker
dams on the Colorado River.
?????Furthermore, the MWD is looking for other locations to generate power
along its complex system of aqueducts and canals, and is mulling proposals to
become partners with would-be power plant builders who need water for cooling.
?????The megawatts produced at Diamond Valley will be sold to the state's
Independent System Operator, rather than Southern California Edison Co. or
Pacific Gas & Electric Co.--and that too is a sign of how the energy shortage
has changed things in California.
?????The MWD has long-term contracts to provide energy to Edison and PG&E
from some of its 15 other hydroelectric facilities. But those financially
shaky companies now owe MWD about $2 million each, and so the MWD decided to
sell to the ISO instead.
?????Beyond serving the state, the MWD stands to make money by selling power
and increasing its stake in the energy business. It plans to use the profits
to pay some of its own electricity bill, which has increased by $110 million
this year.
?????With a fast-track approval process from the Federal Energy Regulatory
Commission, the four 6,000-horsepower pumps were converted in the past two
months to be ready to produce energy for the peak-usage period of each day
during the summer.
?????"We don't have all the whistles and bells on it," said David Gledhill,
principal engineer and project manager for the MWD. "It is more bare-bones
than our other facilities, but it's operational."

Copyright 2001 Los Angeles Times

Wednesday, May 30, 2001
Stop Finger-Pointing and Start Negotiating
By WARREN CHRISTOPHER

?????As a longtime director of Southern California Edison, I am acutely aware
of the severity and complexity of today's unprecedented energy crisis and the
fact that there is no easy or pleasant way out of it. Instead of
finger-pointing, however, I believe we must focus our attention on how to
extricate ourselves.
?????The most promising approach is legislation that is now pending before
state lawmakers that is modeled on the agreement the state has negotiated
with Edison. I support this approach, not simply because of my association
with Edison, but also because I believe it offers a major step toward an
overall solution for everyone involved.
?????The key issue that must be addressed is the precariousness of the
state's major utilities. One is in bankruptcy and another, Edison, is in very
shaky financial condition. This cannot help but further affect the service
levels and the cost of power in the state.
?????Throughout last summer, fall and into the winter, Edison purchased power
from increasingly high-cost wholesale power markets in order to keep
electricity flowing to its customers. The company made no profit for
providing that service and, indeed, suffered power-purchase losses between
May 2000 and January 2001 totaling $5.5 billion.
?????Although federal and state law entitle Edison to recover these costs,
California's regulators have not permitted this. But rather than solely
pursuing its legal rights in the courts, Edison has decided to focus on
negotiating a set of mutual commitments with the state that would address
both the company's need to be restored to financial health and California's
power future.
?????For its part, Edison committed to:
?????* Provide all of its existing power generation capacity, including
hydroelectric power, at cost-based (rather than market-based) rates for the
next 10 years, thus helping to stabilize customer rates.
?????* Bring new power supplies to California customers by selling to the
state, also at a cost-based rate, the entire output of Edison's new,
unregulated Sunrise power station, which is scheduled to come on line in
August.
?????* Take state government out of the power procurement business 19 months
from now, when Edison is again made financially stable and has issued debt
reimbursement bonds whose cost to consumers would amount to roughly 1/2cent
per kilowatt hour.
?????* Invest not less than $3 billion over the next five years in upgrading
the Southern California power distribution system, which is essential to
ensuring the future reliable delivery of power throughout the system.
?????* Sell its transmission system, or alternatively, make other valuable
commitments to the state.
?????Prompt action is needed from the California Legislature on these
proposals. The crisis is having a profound daily impact not just on Edison
but on California's economy as a whole.
?????Just since January, the state has incurred more than $7 billion in power
procurement costs, resulting in a sharp reduction in the state's credit
rating and millions of dollars of additional interest cost every time the
state has had to borrow.
?????There are also credible reports that, in view of our power situation,
out-of-state businesses are deciding against new or further investments in
California and that California businesses are planning to expand elsewhere.
?????The alternative to quick action by the Legislature and Gov. Gray Davis
is stark: bankruptcy for Edison. If that happens, the state will suffer
another blow to its reputation, and there is a strong likelihood that the
quality of service will begin to deteriorate. The state will also be in the
power procurement business indefinitely, with a continuing drain on state
resources.
?????The proposed agreement between the state of California and Edison may
not be perfect. I can attest, however, that it was the product of prolonged,
intense and hard-fought negotiation. Neither side got everything it wanted.
?????But the principles the agreement embodies represent the clearest course
to avoid a major utility bankruptcy in Southern California.
?????These principles also provide a structure that might be adaptable to the
state's two other major utilities.
?????From Edison's perspective, the commitments it is willing to undertake
will seriously constrain the company and limit its profitability for many
years. The executives and directors of Edison have concluded that, as
stewards of the company and citizens of California, taking on these burdens
while continuing to provide essential services is the responsible thing to
do.
?????I hope that the Legislature will rise similarly to the occasion.
- - -

Warren Christopher, Who Was U.s. Secretary of State From 1993-97, Is a
Southern California Edison Board Member

Copyright 2001 Los Angeles Times

Wednesday, May 30, 2001
Bush Isn't Budging, but He Needs to Turn FERC Around
By MEDEA BENJAMIN

?????George W. Bush has been greeted at every stop on his California trip by
angry protesters who believe he has refused to take any meaningful steps to
stop the energy crisis engulfing our state. He has come at a time when
consumers have been socked with the heftiest electricity rate increases in
state history, rolling blackouts have become routine, our largest utility is
bankrupt, and the state's budget is being drained by $70 million a day as
California buys wholesale energy at outrageous prices.
?????There is a very simple measure Bush could take that would alleviate the
crisis overnight. He could tell the Federal Energy Regulatory Commission, or
FERC, to do its job. FERC's legal mandate is to ensure that wholesale
electricity prices are "just and reasonable." But wholesale prices are not
just and reasonable, and they are completely divorced from costs.
?????FERC has been ideologically fixated on the free market while ignoring
the reality that a handful of energy suppliers--most of them from Texas--are
manipulating the market to make obscene profits at our expense. During the
last several months, a flood of media exposes has revealed how the generators
are turning power plants on and off as much as several times an hour to take
advantage of price fluctuation, taking plants offline for "unscheduled
maintenance" and simply refusing to sell power to California. State and
federal investigators say these companies have deliberately price-gouged
consumers by billions of dollars.
?????The result is a massive transfer of wealth from California households to
a handful of energy companies. In the first three months of 2001,
Houston-based Dynegy Inc. posted revenues of $14.2 billion, nearly triple the
$5.3 billion reported in the same period a year ago. Revenues at Enron Corp.
nearly quadrupled from January through March to $50.1 billion, compared to
$13 billion in the first three months of 2000.
?????The profits of such energy companies went up more than 500% between 1999
and 2000, according to state Senate figures. Compare this to the California
Public Utilities Commission's definition of fair rates when it was regulating
utilities: cost plus 10%-12% profit.
?????Does Bush have the power to influence FERC? Of course. Curtis L. Hebert
Jr., who heads the commission, was appointed by Bill Clinton but was elevated
to chairman by Bush. FERC is also under the Department of Energy, headed by
Spencer Abraham, a Bush appointee. If Bush wanted FERC to place controls on
wholesale prices through a system of cost-plus pricing, it would happen
overnight.
?????Bush's long-term energy policy promotes a continued reliance on
polluting fossil fuels and a resurgence of unsafe nuclear energy, while
paying only lip service to smart, sustainable solutions like renewable energy
and efficiency. Under the president's plan, technologies proven to be dirty,
dangerous and expensive will get the lion's share of taxpayer subsidies,
while the 2002 budget slashes funding for solar research by more than 50%,
with major cuts for biomass, geothermal, hydrogen technology and fuel-cell
research. If the Bush administration were to make sustainable energy sources
a priority, existing technologies--wind, solar and some types of
biomass--could solve our long-term energy needs. While such a policy is
anathema to oil, coal and utility industry leaders who supported Bush's
presidential campaign, it is central to any forward-looking energy strategy.
?????The sensible responses to the energy crises are clear--price controls in
the immediate future and reliance on renewables in the years to come. If Bush
continues his current course of action, we can only conclude that he is more
sympathetic to a handful of electricity and gas suppliers than to millions of
Californians.
?????Unless residents of the country's largest state take the effort to make
their voices heard, it's likely that Bush will continue to follow the hands
that feed him, and that doesn't make for a healthy diet. It is up to us
Californians to let the president know he can't afford to kowtow to special
interests. Hopefully, he'll respond to the demands of the angry Californians
he is hearing this week.
- - -

Medea Benjamin Is the Founding Director of Global Exchange, a Corporate
Accountability Organization in San Francisco

Copyright 2001 Los Angeles Times

THE ENERGY CRUNCH
Bush, Davis fail to settle dispute
President travels to state but won't budge on rate caps
Carla Marinucci, Chronicle Political Writer
Wednesday, May 30, 2001
,2001 San Francisco Chronicle
URL: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2001/05/30/MN223796.DTL

Los Angeles -- President Bush and Gov. Gray Davis, who have sparred
long-distance for weeks about California's power woes, clashed in person
yesterday over their vastly different views on the need for energy price
controls.
Bush, in a speech before the World Affairs Council in Los Angeles, argued
that California's energy crisis demands "action, not politics, not excuses,"
and he ruled out federal price controls on the wholesale costs of energy,
saying, "We will not take any action that makes California's problems worse."
Davis, however, argued that California's consumers are getting "a raw deal"
without price limits. He said he will sue the federal government to impose
controls, which he deems essential to fixing the state's energy problems.
Emerging from a 35-minute meeting with Bush -- nearly twice as long as
scheduled -- Davis said the session was "informational, businesslike" but "we
still have a fundamental disagreement over whether or not California is
entitled to price relief."
"I don't think it's a matter of philosophy or ideology. It's a matter of
law," Davis said.
Federal agencies "made a determination in November, and again Dec. 15, that
the California market was dysfunctional, prices were too high, . . . and we
are entitled to some form of price relief," the governor said.
Davis warned that without price controls the state would spend $50 billion on
power, which could send the economy spiraling down and affect the nation.
The meeting, although described by both sides as cordial, highlighted deep
philosophical and political differences between Bush and Davis over the
state's energy crunch. Those opposing views have been underscored by
increasingly harsh rhetoric between top Bush administration officials,
including Vice President Dick Cheney, and the governor and his top aides.
Energy has dominated the California political landscape in a way no one could
have predicted during last fall's campaign. Field Polls released last week
show Californians are disappointed in the performance of both men on the
energy front. Rolling blackouts and rising utility bills account in large
part for an 18 percentage point drop in the once-popular Davis' job approval
rating from January to May, analysts say.
Bush's first trip to California as president is intended to counter the
governor's repeated criticism that he has not helped the state solve the
energy crisis. Both men tried to spin the trip -- and yesterday's personal
meeting -- to gain a measure of public support.
Political analyst Sherry Bebitch Jeffe said Bush's visit could help him
repair his image in California, where Davis has tied the president to big oil
interests.
BULLY PULPIT
"For too long, (Bush) has ceded the bully pulpit to the governor," allowing
him to be tied to "oil buddies" in Texas, Jeffe said after the president's
speech in Los Angeles. "Did he sound like an oil guy today? I was looking
around for the tree he was gonna hug."
In a 22-minute speech to an audience of several hundred, Davis among them,
Bush said, "for too long -- and too often -- too many have wasted energy
pointing fingers and laying blame. . . . Energy is a problem that requires
not excuses, but action. And blame shifting is not action -- it is a
distraction."
Bush repeated his opposition to price limits, which, he said, "do nothing to
reduce demand, and they do nothing to increase supply."
Davis and other Democrats, including California Sen. Dianne Feinstein, have
for months urged Bush to order price controls. Garry South, Davis' senior
political adviser, charged yesterday that Bush, not the governor, was playing
politics with California's future.
The president must come to grips with "the notion that adhering to rigid
ideology in the face of an existing law, which requires him to act, is not
just some kind of a face off with the governor of California," South said.
"It actually endangers the national economy."
'GREEDY ENERGY COMPANIES'
Bush's speech, which addressed trade, the economy and tax issues as well as
energy, was interrupted by lengthy heckling from three protesters, including
former Green Party U.S. Senate candidate Medea Benjamin. The protesters,
yelling "stop the greedy energy companies," and "price caps now," were
hustled out, and one was arrested.
But the president, to warm applause, pressed on with his talk, saying that
the administration has taken specific steps to assist California, including
working with Davis "to speed the approval of new power plants, expand
electricity production, and increase the flow of natural gas into the state."
Bush also stressed conservation as "an important part of the energy
equation." He said his proposed energy plan "encourages renewable sources of
energy, including "safe and clean nuclear power, wind, solar, biomass."
And the president repeated his commitment to uphold the moratorium on
offshore oil drilling in California.
Bush also said he will take aggressive action to ensure that consumers are
protected against price gougers.
"The federal government takes very seriously our responsibility to make sure
that companies are not illegally gouging consumers," he said. "We will
protect consumers against abuses."
In Los Angeles, and earlier in the day at Camp Pendleton near San Diego, Bush
attempted to dismiss the debate over energy as political posturing.
'TIME TO PUT ASIDE POLITICS'
"It's time to put aside politics and focus on the best interests of the
people," he told several hundred Marines at Camp Pendleton. "This is no time
for harsh rhetoric. This is no time for name calling. It is time for
leadership. It is time for results."
Bush said he will ask Congress to appropriate $150 million for "low-income
energy assistance" in addition to the $300 million for such aid already in
his budget.
The president also said he will direct Energy Secretary Spencer Abraham to
smooth the way for permits and easements needed to "unplug the Path 15
bottleneck" -- a problem with the transmission grid that restricts the flow
of energy from Southern to Northern California.
Before their private meeting, Bush and Davis met in a closed-to-the-press
session with a dozen business leaders, including the heads of Santa Clara's
Intel Corp. and National Semiconductor Corp., to discuss the energy crisis.
"Both the governor and the president seemed fairly inquisitive," said one
participant, John Woolard, chief executive of Alameda software-maker Silicon
Energy Corp. "They wanted to know what was actually realistic to solve the
problems."
That 45-minute meeting, also attended by Los Angeles Mayor Richard Riordan,
apparently went more Bush's way than Davis. The business leaders supported
the president's calls for entrepreneurs to help solve California's troubles,
and no one brought up the topic of price controls.
Woolard said Bush and Davis "seemed surprisingly comfortable with one
another," although it was Bush who clearly was in charge of the talks.
Overall, he said, Bush was "sympathetic to California's problem and wanted to
do whatever he could, within certain constraints."
Price limits, Woolard concluded, obviously were one such constraint.
Chronicle staff writer David Lazarus contributed to this report. / E-mail
Carla Marinucci at cmarinucci@sfchronicle.com.
,2001 San Francisco Chronicle ? Page?A - 1

Davis' canny use of media manages to upstage Bush
Phillip Matier, Andrew Ross
Wednesday, May 30, 2001
,2001 San Francisco Chronicle
URL: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2001/05/30/MN168332.DTL
The spinmeisters worked overtime to control yesterday's George Bush- Gray
Davis energy shootout -- but from the looks of things, Davis' folks got the
upper hand.
The White House had tried to dodge a punch by scheduling the Davis-Bush
meeting too late for the national evening news -- but Davis' people didn't
miss a beat.
They held a little premeeting gathering of their own up in the governor's
suite at the Century Plaza in Los Angeles at 10 in the morning where they
invited a group of people from San Diego to come in and tell their energy
crisis "horror stories."
And wouldn't you know it, all the national press was invited to Davis'
meeting as well.
The governor then did separate "sit-downs" with five national networks. And
that didn't include the network morning shows he appeared on just to get
things rolling.
"It was pretty clear that the Bush team wanted the president's Camp Pendleton
visit to be the story of the day," Davis' right-hand political adviser Garry
South said as the cameras were setting up. "But hey, what can I say -- we're
pretty good at what we do, too."
Then, of course, there were the battling postpresidential-confab news
conferences: Davis on the ground floor, and Bush advisers Gerald Parsky and
Karl Rove holding forth one floor below.
But again Davis got the upper hand -- 18 TV cameras showed up for the
governor's press conference. The Bush team got only one.
Bush, on the other hand, did receive a standing ovation at a luncheon speech
before the World Affairs Council, also at the Century Plaza.
Even some Republicans were taken aback by the Bush team's apparent lack of
political thinking in the sit-down with Davis.
"The meeting never should have happened in the first place," said former U.
S. Secretary of Energy (and former state GOP chairman) John Herrington.
In Herrington's view, it was clear from the start that Davis was "just going
to use the meeting to kick the stuffing out of the president."
And if there was to be a meeting, he says, it should have included some
Republican legislators who support the president's energy plan.
"That way, they would at least have people coming out on the president's
side," Herrington said. "This way, Bush just comes off as Davis' scapegoat."
And with every move, an ever-courteous Davis played the role to the hilt,
sticking like glue to his main talking points:
-- California is building new energy plants as fast as possible.
-- The state is undertaking a major conservation drive.
-- The president needs to back temporary price controls to limit the
skyrocketing electric prices being charged by out-of-state power companies.
And at the end of the day, that was pretty much the message that went out.
DOMESTIC MATTERS: Big sit-down the other day at the D.A.'s office -- with
Terence Hallinan making it clear that he wants the "charge count" upped on
domestic-violence cases.
Seems stats show that San Francisco is running below the state average when
it comes to taking domestic cases to court.
In April, for example, of the 192 domestic-violence cases brought in by the
cops, fewer than half wound up going to court -- mostly for lack of evidence.
But Hallinan (who is already eyeing a run for mayor) wants that to change.
"We've got to do better even if it means tightening up the charging
criteria," Hallinan told us.
In other words -- push cases they know they're going to lose.
"It's B.S.," one cop tells us. "They're just doing this so that the numbers
look better -- the cases are just going to get tossed anyway."
Maybe, but as far as Hallinan is concerned, that's just "all part of the
process."
LAWYER BUZZ: The big energy suppliers aren't the only ones cashing in big
time on California's gas and electric crunch -- so are the lawyers and
consultants handling Pacific Gas and Electric Co.'s bankruptcy.
According to the Daily Journal legal newspaper, dozens of attorneys and
financial consultants -- some charging as much as $550 an hour -- have been
assigned to the case. And they stand to collect "tens of millions of dollars"
in fees before their work is finished.
And although a bankruptcy judge must sign off on the final bill, the
newspaper says, "Whatever amount the judge finally approves, including fees
for attorneys for both the utility and its creditors, comes out of the PG&E
bankruptcy estate, which ultimately means the pockets of ratepayers."
In the case of San Francisco's Howard, Rice, Nemerovski, Canady, Falk &
Rabkin, the law firm not only raised its rates by 16 percent -- but tripled
its proposed PG&E team to 34 lawyers and assistants.
"A one-hour meeting of the entire team would cost the utility $9,575," says
the Daily Journal. "That's $159 a minute."
Chronicle staff writer Carla Marinucci contributed to this report. /
Chronicle columnists Phillip Matier and Andrew Ross can be heard on KGO Radio
on Mondays, Wednesdays and Thursdays. Phil Matier can also be seen regularly
on KRON-TV. Got a tip? Call the
,2001 San Francisco Chronicle ? Page?A - 15

NEWS
Democrats sponsor energy talks / Bush still at odds with call for federal
support of conservation
Rick DelVecchio
?
05/30/2001
The San Francisco Chronicle
FINAL
Page A.8
(Copyright 2001)
Francie Moeller owns a portable generator, but don't ask her to turn it on
when she's home alone during a rolling blackout. She is disabled and can't
pull the starter cord.
Generators with powered starters are available, but at $5,000 they are not in
Moeller's price range.
"And please don't ask me to unplug my appliances," said Moeller, who uses a
wheelchair and serves as chairwoman of the California Democratic Party
Disability Caucus.
On the same day that President Bush visited California to promote his energy
plans, Moeller and a dozen other speakers testified yesterday in Oakland at a
congressional hearing designed to advance Democrats' ideas of what to do
about the power crisis.
Most of the speakers during the two-hour hearing argued for the need for
price caps on wholesale power to take the strain off consumers like Moeller
and to keep the state and national economy from sputtering. They also
advocated more federal involvement in conservation, especially in demanding
that manufacturers develop more efficient appliances, and in pushing solar
and wind power as long- term solutions.
The hearing, organized by Rep. Barbara Lee of Oakland and joined by seven
other House Democrats, including the headliner, House Democratic Leader
Richard Gephardt of Missouri, served to buttress Gov. Gray Davis in his
efforts to convince President Bush of the need for price caps.
"Price constraints on wholesale prices -- that's the help he (Davis) needs
now," Gephardt said.
Bush, at a short meeting in Los Angeles yesterday with Davis, repeated his
opposition to price levels. Gephardt said he hoped Bush returned to
California and stayed longer to hear what power users had to say, arguing
that their views ultimately would steer government's response to the crisis.
A Democratic bill to implement wholesale price caps failed to reach a
bipartisan compromise to move it out of a House committee last week. Gephardt
said that negotiations would continue but that he was prepared to seek the
support of a majority of House members to discharge the bill to the floor.
Gephardt said the power supply crisis that affects California , Oregon and
Washington posed a threat to the national economy. "My worry is when you put
gasoline prices that are going up all over the country with electricity
prices that are up all over the West Coast, you really have a reduction in
consumer buying power," he said.
Yesterday's hearing also took testimony from labor and seniors'
representatives, from small-business managers and from a school
superintendent.
Thane Kreiner of the biotech firm Affymetrix said two rolling blackouts
earlier this month had shut down the firm's Emeryville plant at a cost of
$125,000 in lost production. In order to avoid a far more damaging outage at
the firm's Sacramento plant, the company has invested in a $1.5 million
backup generator.
"Clearly, we'd have liked to spend that money on other things," Kreiner
added, saying that many small businesses couldn't afford the luxury of backup
power.
Gary DeAtley, president and CEO of California Sun Dried Foods, worries that
blackouts will hit during the months when his product is in electric-powered
cold storage.
Mary Frances Callan, superintendent of the Pleasanton Unified School
District, said the district next year would pay the equivalent of $155 per
student for power, double what it paid three years ago. She totaled the cost
in terms of lost opportunity for students.
"We could buy a half-time, fully credentialed librarian for each school, or
an additional half-time counselor," she said. "I could have 9,000 additional
textbooks, or 23,000 additional library books."

Appeals court declines to order energy price caps as California threatens to
sue federal government
By DAVID KRAVETS
?
05/30/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.
SAN FRANCISCO (AP) - Gov. Gray Davis threatened to sue the federal government
for help in his state's power crisis after an appeals court declined to order
energy regulators to cap wholesale electricity prices.
A three-judge panel of the 9th U.S. Circuit Court of Appeals issued a
statement Tuesday saying last week's appeal by state Senate President John
Burton and Assembly Speaker Robert Hertzberg did not warrant the court's
intervention.
The lawmakers, both Democrats, were joined by the city of Oakland in their
appeal to the 9th Circuit, which has jurisdiction over the Federal Energy
Regulatory Commission.
"The citizens of California are suffering immediate irreparable harm as a
result of FERC's abrogation of its duty to establish just and reasonable
rates for electricity ," they wrote.
Wholesale power prices have shot up over the past year. In December, prices
in California reached $200 per megawatt hour. Since then, they have risen to
as much as $1,900 per megawatt hour.
The court's decision was announced hours before Davis was to urge President
Bush to cap wholesale power costs. Bush, as expected, rejected Davis' plea.
Davis said he would sue FERC for price relief if necessary, noting that the
agency has already found that energy costs are unreasonable.
In April, FERC ordered a one-year cap on electricity sold into California
during power emergencies, when power reserves fall below 7 1/2 percent. The
agency did not set a price and also required the state to join a regional
transmission organization, which could limit California 's ability to control
its own power grid.
Davis called the plan a "Trojan horse," and state power regulators dismissed
the cap as inadequate, saying it would profit power generators at ratepayers'
expense.

President unmoved by governor's appeal for relief
Posted at 10:39 p.m. PDT Tuesday, May 29, 2001
Dan
Gillmor: Davis-Bush meeting falls short of full truth
BY JIM
PUZZANGHERA
Mercury News Washington Bureau

LOS ANGELES -- Gov. Gray Davis and President Bush ended weeks of harsh
rhetoric with a cordial meeting in a quiet hotel room here Tuesday. But the
two couldn't resolve their biggest difference over the state's electricity
crisis: what Washington should do to help.
Bush remained unmoved in his opposition to the price caps California
officials have sought. And Davis emerged from their 35-minute meeting
declaring he had no choice but to go to court to force federal regulators to
enact the temporary limits on wholesale electricity prices.
``On the big enchilada, the thing that matters above all else, temporary
price relief, I'm disappointed that we do have a fundamental disagreement,''
said Davis, who presented Bush with a briefing book describing the state's
response to the crisis. ``And I did tell him that if we do have to pay $50
billion for power, it could well trigger a recession in California which
could drag down the American economy into a recession.''
Davis had little reason to be optimistic heading into the meeting. Shortly
before, Bush publicly reiterated his strong opposition to price caps in his
most extensive comments to date on California's energy troubles.
``We will not take any action that makes California's problems worse -- and
that's why I oppose price caps,'' Bush said in a speech to the Los Angeles
World Affairs Council. ``At first blush, for those struggling to pay high
energy bills, price caps may sound appealing. But their result will
ultimately be more serious shortages and, therefore, even higher prices.''
White House officials said price caps would discourage conservation by
consumers, lead power wholesalers to sell their electricity elsewhere and
make companies less inclined to invest in new power plants in the state.
But Davis said price caps are the only way the state can rein in the soaring
costs of electricity until new power plants under construction are online.
And Davis emphasized his belief that federal law requires regulators in
Washington to enact such price caps after they found last fall that
electricity prices in California are ``unjust and unreasonable.''
``While the president and I have a fundamental disagreement over whether or
not California is entitled to price relief, I believe there is no doubt we're
entitled to it as a matter of law,'' Davis said. ``We will file a lawsuit
against the Federal Energy Regulatory Commission for failing to discharge its
legal obligations.''
The lawsuit probably will not be filed for about 30 days, Davis said.
Tuesday, a three-judge panel of the 9th U.S. Circuit Court of Appeals in San
Francisco declined to order regulators to cap wholesale electricity prices.
The state attempted to solve that problem by filing an official request for
rate caps with FERC on Friday. The commission now must consider the
application, but is expected to deny it, opening the door for the federal
lawsuit.
Davis and Bush greeted each other warmly on the stage of a ballroom at the
Century Plaza Hotel. Davis used both hands to clasp Bush's right hand when
they met on stage before the speech, and the two shared a laugh afterward.
But Davis listened impassively as Bush restated his policy differences with
the governor -- then indirectly criticized Davis and other Democrats for
their pointed attacks on his energy positions.
``For too long and too often, too many have wasted energy pointing fingers
and laying blame,'' Bush said in a speech that twice was interrupted by
people protesting his opposition to price caps. ``Energy is a problem that
requires action, not politics, not excuses, but action. Blame-shifting is not
action, it's a distraction.''
Davis' chief political adviser, Garry South, said Bush's criticism was
misplaced.
``I think he ought to perhaps go back and listen to his vice president, who's
basically been running a campaign of vilification against Gray Davis for a
couple of weeks,'' South said of recent comments by Vice President Cheney.
``We need action from the federal government, the FERC and this
administration. .?.?. There's plenty of action in California.''
Bush did offer some limited relief for the state.
?He has asked Pat Wood, one of two new appointees to the FERC, to meet with
Davis about a possible investigation into why natural gas from Texas is
selling for $15 per Btu in California but only about $6 in New York. Wood is
the former chair of the Texas Public Utilities Commission.
?He vowed to keep a campaign pledge to oppose any new oil drilling off the
California coast. A Department of Interior advisory report released earlier
this month recommended pilot projects be undertaken in areas such as
California that currently have a drilling moratorium.
?He announced that he was asking Congress for an additional $150 million for
the federal Low Income Home Energy Assistance Program on top of the $300
million he requested for the program in his 2002 budget. The plan coves the
entire nation, not just California.
Bush also called for an end to the political battles over California's energy
problems during a speech at the Camp Pendleton Marine Corps base near San
Diego.
``Energy debates sometimes throw off some sparks. But this is no time for
harsh rhetoric, it's certainly no time for name-calling,'' Bush told a crowd
at the base after touring the base's energy-management control room and
thanking the Marines for their efforts to conserve energy. ``It's time for
leadership. It's time for results. It's time to put the politics aside and
focus on the best interests of the people.''
Bush's first visit to the state since October comes as both he and Davis have
seen their approval ratings plummet in statewide polls. And both sides are
scrambling to deflect the blame for mishandling the electricity problems,
said Sherry Bebitch Jeffe, a political analyst at the Claremont Graduate
University.
``I don't know who's winning. I don't know who's losing. It's all about
positioning right now,'' said Jeffe, who went to the Century Plaza Hotel to
personally watch both Davis and Bush on Tuesday.
Davis appeared on all three major network TV morning shows Tuesday to plead
his case, as well as taping an interview with CNN for broadcast Tuesday
night. Davis also met with a group of California consumers and business
representatives in Los Angeles on Tuesday morning to discuss the impact the
crisis is having on them. Meanwhile, House Minority Leader Dick Gephardt of
Missouri and five Bay Area congressional Democrats held a hearing on the
energy issue in Oakland on Tuesday.
For its part, the White House sent Commerce Secretary Don Evans out to do TV
interviews to defend the administration's policy. Bush also dispatched top
aides to brief reporters after the meeting with Davis.
The issue's volatility was on display on the streets outside the hotel. About
100 protesters gathered outside the Century Plaza Hotel, where Bush gave an
afternoon economic speech. Many still protested Bush's controversial election
win after the Florida recount in December, but some were focused on his
handling of energy issues. One sign read, ``Bush Cheney Fossil Fools'' and
``Bush/Enron Thieves.''

Davis-Bush meeting falls short of full truth
Posted at 11:01 p.m. PDT Tuesday, May 29, 2001
BY DAN GILLMOR

Mercury News Technology Columnist

California Gov. Gray Davis got another stiff-arm from President Bush on
Tuesday, this time in person. Once again, the president refused to intervene
in any near-term plan to deal with the soaring price and decreasing
reliability of energy here, a double whammy that will help tilt the state
into a recession later this year.
Davis is undoubtedly right when he charges energy producers with an
old-fashioned practice called price-gouging. Another way to say this is
``charging what the market will bear'' -- but that's not the way to stir up a
public that seems to consider cheap, plentiful power a fundamental human
right.
Bush is right that this problem needs a long-term solution, on the principle
that the wrong kind of short-term fix would only make things worse later on.
But that's just cover for his administration's misguided, drill-and-burn
energy policy.
Neither of these political pros is telling the whole truth, needless to say.
And, barring intervention from a power higher than political expediency,
don't hold your breath waiting for that kind of honesty.
If Bush wanted to tell the truth, he might admit that his policy is tilted
toward his political and financial supporters, many of whom come from his
home state of Texas. He'd acknowledge that California's propensity for voting
for Democrats in statewide elections doesn't make him all that excited about
bailing us out at the expense of the people who backed him.
Bush may be correct to say that we can produce our way out of the current
mess. But a man who talks about the long term can't hide the fact that you
can't produce affordable non-renewable resources forever.
So an honest federal plan would emphasize conservation, not brush it aside as
the vice president and other administration officials have cavalierly done.
An honest plan would not pay mere lip service to renewable energy sources.
But Davis is no slouch when it comes to denying reality, either. Oh, he
admits that California's government -- albeit with the help and support of
the energy companies -- enacted the bogus electricity deregulation plan. But
he would win more points if he also noted that the current system all but
invites the producers to use what economists quaintly call ``market power''
to jack up prices so high.
He forgets that California and the nation lived in a fantasyland of
unsustainably low energy prices during much of the 1990s. We persistently
fail to learn anything from history, namely that commodity prices, even ones
that are subject to rigging, tend to fluctuate in extreme ways. And when
you're depending on non-renewable energy sources, the trend line will be up.
Davis turns his administration's power purchases, on behalf of the utilities,
into state secrets and insists that we trust him. Well, we don't. He hasn't
earned it.
One of the most depressing moments in the recent battle over federal income
tax rates came when Bush told Congress that the best way to help California's
hard-hit energy users was to cut taxes. Maybe we should just send those
refund checks to Texas, where they apparently belong.
If Davis had even an ounce of risk-taking in his soul, he'd find a better way
to deal with this situation than launching lawsuits, making threats and
stirring up resentment. He's not much of an economist or forward-thinker, but
he's a truly low-class demagogue.
Davis should thank Bush and Congress for the tax cut -- and then urge
California to put it to the best possible use. He should suggest we pool
California taxpayers' share of that money, and embark on a crash program to
curb energy consumption and develop renewable sources.
Get the brightest minds in the technology and venture-capital communities to
join this crusade. And put it on the ballot for voters to decide. I'm betting
they'd approve, overwhelmingly.
Let's face reality here. The energy producers are going to take as much of
our money as they can. This president isn't about to stop it.
A governor with vision would be looking for a way to stick it to the
producers, not just in court, but in the way they understand best. Let's stop
complaining about this market. Let's change the balance, in our favor.

Dan Gillmor's column appears each Sunday, Wednesday and Friday. Visit Dan's
online column, eJournal (www.siliconvalley.com/dangillmor). E-mail
dgillmor@sjmercury.com; phone (408) 920-5016; fax (408) 920-5917. PGP
fingerprint: FE68 46C9 80C9 BC6E 3DD0 BE57 AD49 1487 CEDC 5C14.

Farm influence sways state power policy
Posted at 10:39 p.m. PDT Tuesday, May 29, 2001
BY DION NISSENBAUM

Mercury News Sacramento Bureau

SACRAMENTO -- As special interests struggle for advantage amid California's
energy crisis, one group of energy users -- perhaps more than any other --
has helped to shape, steer and stall the state's efforts: farmers.
Farmers have fought off stiff rate increases, shot down early efforts that
could have saved Pacific Gas & Electric Co. from bankruptcy and locked up
millions in special state subsidies to help cut their energy costs.
``Their influence is extraordinary,'' said V. John White, an environmental
lobbyist who has been immersed in the Capitol energy crisis negotiations.
With good reason, some say.
California is the nation's largest farming state. Between 500,000 and 1.1
million people work in agriculture, accounting for up to one of every 14
state jobs. Each year, big agricultural interests spend millions lobbying
state leaders and millions more donating to their political campaigns.
Their clout has paid off at every turn in the energy crisis.
From San Francisco to Sacramento, they have been successful in fending off
solutions that could have hurt their interests.
Like big business, farmers have historically paid much less for energy than
average Californians or small businesses.
Successful lobbying
As everyone from consumer groups to Silicon Valley leaders tried to fight off
big rate increases crafted earlier this month by the Public Utilities
Commission, agriculture had the biggest success in dulling the impact on
their industry.
Average Californians are paying up to 35 percent more for power. Farmers
managed to get regulators to scale back a proposed 25 percent rate hike to
about 15 percent.
``Clearly agriculture is unique,'' said Michael Boccadoro, an industry
lobbyist. ``Agriculture is going to be probably the hardest hit industry in
California this summer.''
In Sacramento, Boccadoro has been involved in every major policy decision
made in the Legislature. He has worked with lawmakers until well past
midnight to write and rewrite energy bills, access that has ruffled a few
feathers in the Capitol.
``I would say agriculture has had a disproportionate influence'' on energy
policy, said one legislative staffer who has written or analyzed almost every
major energy proposal in the Capitol.
The influence began early in the energy crisis.
When Assembly Speaker Robert Hertzberg, D-Van Nuys, floated the idea of
buying PG&E's power-generating dams, Boccadoro rallied his troops and helped
persuade moderate Democrats to challenge their leader.
Within days, the proposal that farmers feared would put too much control of
water in state hands was dead. And with it went an early opportunity to
prevent PG&E from falling into bankruptcy.
Agriculture's influence became very public last month when its lobbyists
helped orchestrate a legislative ambush that stunned even some veteran
lawmakers.
For weeks, state Sen. Byron Sher, D-Redwood City, had been working to cobble
together a $1 billion conservation program meant to cut energy demand
dramatically this summer.
But lawmakers from the Central Valley -- the heart of farm country -- refused
to back the measure until Sher included special perks for agriculture.
The bill languished as legislators tried to work out a compromise.
Sher agreed to rewrite the bill to include millions to help farmers buy
low-polluting equipment. Apparently, it wasn't enough.
Agricultural lobbyists turned to supporters in the Assembly. As Sher stood up
to present his bill in the Assembly Appropriations Committee, the house
Democratic leaders directed the chairwoman to add new agricultural perks to
the delicately balanced bill.
``That was the part that took me back,'' Sher said, recalling his
frustration. ``But you roll with the punches.''
Farmers were seeking special limits on the amount of time they could be
forced to shut off their power during energy emergencies. And they wanted
permission to run high-polluting diesel generators when they were blacked
out.
State Sen. Mike Machado, D-Stockton, a farmer who pushed for the various
changes, said it was important for state leaders to consider how agriculture
fits into California's ``economic fabric.''
``I use computer technology in my farm, in my tractor, so I need Silicon
Valley,'' Machado said. ``They need me to ensure there is fruit and
vegetables on their tables.''
Other industries
But other legislators said there was no rational reason to treat agriculture
differently from any other major industry. And they complained that the
last-minute legislative assault prevented any discussion on the merits of the
issue.
``If you make a straight-up case about why you should be exempted, it's
easier for us to understand,'' said state Sen. Don Perata, D-Oakland. ``When
you sneak around or try to mug someone in the alleyway on the way to the last
committee, it raises the suspicions that they can't get the amendments on
their merit.''
In the end, agriculture lost the cap on blackout hours, but kept millions in
subsidies and broad language that they contend will allow them to run diesel
engines when their power is turned off.
Environmentalists dispute that interpretation, but farm interests quickly
lined up the state's top environmental official -- Environmental Protection
Agency head Winston Hickox -- to write a letter to lawmakers on their behalf.
Perata questioned the industry's efforts and said creating special exemptions
for agriculture is not in the state's interest.
``If you are NUMMI motors in Fremont and employing 3,900 people and
generating the kinds of revenues you do in the state, why should you feel
that what you are doing is any less important than someone bottling
pickles?'' he asked.

Mercury News Staff Writer Hallye Jordan contributed to this report.

No help
Published Wednesday, May 30, 2001, in the San Jose Mercury News
He's here.
Get ready for nothing to change.
George Bush has landed in California, sat face-to-face with Gov. Gray Davis
and heard firsthand the pitch for price controls on the wholesale cost of
electricity.
He wasn't observed walking out of the meeting, cellphone to his ear, barking
new marching orders to the Federal Energy Regulatory Commission.
Bush and his energy advisers were schooled by independent energy producers;
we don't expect them to renounce their roots.
But convictions don't relieve Bush, or more precisely, the Federal Energy
Regulatory Commission (FERC), of the obligation to follow the law. The
Federal Power Act charges FERC with setting ``just and reasonable'' rates for
electricity.
If he were wise, Bush would find in temporary rate regulation a less direct,
but surer, route to his goal of free markets in electricity, because what's
happening in California is spooking everyone else.
Those points are emphasized in a letter sent to Bush over the weekend by 10
economists, all but one of whom closely watched the electricity market in
California by participating on one of various independent market monitoring
panels.
In a dysfunctional market, the economists argue, the law does not permit FERC
to just let prices go where they will. Additionally, ``FERC's failure to act
now will have dire consequences for the state of California and will set
back, potentially fatally, the diffusion of competitive electricity markets
across the country.''
Bush gave no indication Tuesday that he was coming around to that point of
view. Quite the contrary. The most he offered to California was an increase
of $150 million in federal assistance for low-income energy customers, and a
promise to look into why natural gas in California is so much more expensive
than elsewhere.
But then the notion that Bush might be coming to the formerly-Golden State to
publicly recant was fanciful, to say the least. The whole visit, in fact, has
been saddled with a significance it did not merit.
Did it take so long (four months and one week since the inauguration!) for
Bush to visit this most important of states (the California view) because he
wanted to punish us for the drubbing he took here on Election Day? Because he
wanted to cripple Davis, possibly a Democratic presidential contender?
Because he feared to venture into hostile territory?
Or did he just have better ways to spend his time -- like clobbering the
Democrats on the tax bill?
In the end, the Bush-Davis conversation merely solidified the conventional
wisdom. To get relief from high electricity prices, California will have to
look somewhere other than the White House.

Bush: No price caps
President tells Davis the federal government won't limit energy costs.
Governor threatens to sue regulatory panel.
May 30, 2001
By CHRIS REED
and KATE BERRY
The Orange County Register

President George W. Bush, right, greets Gov. Gray Davis before Bush addressed
the World Affairs Council in Los Angeles on Tuesday.
Photo: Jebb Harris / The Register
?
?

LOS ANGELES - President George W. Bush on Tuesday cut out the middlemen and
told Gov. Gray Davis the bad news to his face: The federal government will
not impose wholesale price caps on energy costs, no matter how many billions
of dollars the state government must spend to keep the lights on.
"Price caps do nothing to reduce demand and nothing to increase supplies,"
Bush told the World Affairs Council in a luncheon speech as Davis looked on.
Afterward, he warned Davis in a private, 35-minute meeting that caps could
make matters worse by discouraging production.
Davis said that not only was Bush wrong, but that failing to impose caps was
illegal.
"My view is we are entitled to (wholesale-price) relief by law," he said,
announcing plans to sue the Federal Energy Regulatory Commission, which
regulates wholesale power prices.
The tough talk reflected the high economic and political stakes in the energy
crisis.
Some economists fear skyrocketing energy costs could force the state into
recession.
Anxiety over the crisis has taken a toll on Bush's and Davis' popularity with
Californians in recent polls.
On Tuesday, Bush sought to counter his image as being indifferent to state
problems.
In a morning speech before an adoring crowd of Marines at Camp Pendleton, he
touted federal conservation efforts.
In his luncheon address, Bush detailed his moves to increase energy
production.
Davis stuck to the themes he has hammered home in recent weeks: that
price-gouging producers and a do-nothing federal government are responsible
for the crisis.
Protesters who heckled Bush at his luncheon speech and rallied outside Camp
Pendleton mostly sided with Davis.
"We are being singled out because this state didn't vote for Bush," Natalie
Bernard of West Hollywood said in Los Angeles.
Contact Reed at (714) 285-2862 or chrisreed@ocregister.com.
Contact Berry at (714) 796-2235 or kberry@ocregister.com.

A day of spin over substance
Bush seeks to show he cares about state's hardship. Davis works to shift
blame for crisis from Sacramento to D.C.
May 30, 2001
By CHRIS REED and KATE BERRY
The Orange County Register
Like his father blurting out, "Message: I care," in a desperate bid to
connect with recession-weary voters in 1992, George W. Bush crisscrossed
Southern California on Tuesday with a similar urgent mission.
That mission: convincing voters that no matter how much they may have heard
otherwise, this president cares about the state's energy crisis.
Bush Sr., tarred as out of touch with everyday voters, lost his re-election
bid. Now his son is gambling that his refusal to provide Californians some
short-term relief to the energy crisis won't be held against him - or against
state Republican congressmen up for re-election in 2002.
Meanwhile, Gov. Gray Davis used the spotlight afforded by his Tuesday
face-to-face meeting with Bush to pursue his own agenda of reviving his
political stature. At stake: not just his 2002 re-election bid but a possible
challenge to Bush in 2004.
Davis argued in a news conference before the national media and in a live
appearance on CNN that Texas oilman Bush is tolerating price gouging by Texas
energy companies. It was the latest salvo in the governor's campaign to shift
voters' ire away from Sacramento and the Democratic-controlled state
government.
But for voters hoping for concrete action instead of high-stakes spinning,
Tuesday was one more disappointment. With small exceptions, the president and
the governor agreed to disagree on what should be done.
The day's focus for both politicians often appeared to be damage control.
Davis said he and the president swapped praise on conservation efforts, and
the governor said Bush agreed to have federal investigators look into why
California is paying much more for natural gas than other states.
But on the issue that Davis described as "the big enchilada" - his request
that the Federal Energy Regulatory Commission impose emergency price caps on
electricity - "the president and I have a fundamental disagreement," Davis
said.
Davis announced after meeting with Bush that he planned to sue FERC for
failing to cap wholesale prices, even though a San Francisco federal court
Tuesday threw out a similar lawsuit filed by state legislative leaders.
Bush conceded in his speech to the Los Angeles World Affairs Council that "at
first blush, price caps sound appealing. But the reality will only increase
prices and create further shortages."
Instead, Bush touted his push for increased oil, coal and natural-gas
production and a new look at nuclear power.
At a morning speech at Camp Pendleton, the president said he will ask
Congress to provide an extra $150 million to help low-income households
strained by energy costs.
Bush also stressed conservation, a theme his administration has emphasized
since Vice President Dick Cheney drew fire a month ago for saying
conservation was at best a small part of the solution to energy-supply
shortages.
Davis called the president's approach woefully inadequate.
"I explained to the president (that) if he were governor, like I, he would be
doing everything in his power to fight for the 34 million people who are
getting a raw deal," Davis told reporters.
That the president would come to California without a dramatic offer of
immediate help reportedly amazed Davis' aides.
It also angered many of the protesters who gathered outside the main entrance
to Camp Pendleton early Tuesday and who heckled Bush during his Los Angeles
speech.
Bush is "trying to destroy the economy of California because we didn't vote
for him," said Ceil Sorensen, 79, of Granada Hills, a Green Party member who
was one of about 300 protesters inside and outside the Century Plaza Hotel,
where Bush spoke.
Not all protesters limited their criticism to Bush.
"Davis is doing a horrible job at managing this crisis," said Danny Miller, a
38-year-old filmmaker from Ojai.
And two Orange County Republican congressmen who came to Bush's Camp
Pendleton speech insisted that voters blamed Davis and state Democrats for
the energy mess.
"The politicians who are now demanding this and demanding that, they're the
ones who controlled the state Legislature and the governor's office," said
Rep. Dana Rohrabacher, R-Huntington Beach.
Davis "has had over two years with this problem and has been unable or
unwilling to do certain things to solve it," said Rep. Darrell Issa, R-Vista,
whose district includes parts of south Orange County.
Still, Bush's approach has done little to prevent a drop in his popularity
among Californians of both parties, according to recent polls.
His comments Tuesday angered at least one rank-and- file member of the Orange
County GOP, who phoned The Orange County Register with unsolicited criticism.
"He's selling us down the river," said Bud Parriott, 58, of Garden Grove.
"I've been a registered Republican my whole life, but I'm quitting the
party."
Bush will spend time in Fresno and the Sequoia National Forest today before
heading home to Washington, D.C. He could face a final, dramatic reminder of
the state's problems.
Energy demand is expected to soar today as near-record heat settles on the
valleys of Los Angeles and Ventura counties, according to the National
Weather Service. Temperatures could reach 90 degrees in Yorba Linda.
State officials did not issue any blackout warnings, however.

PG&E Comments On Federal Plan to Expand Path 15

May 30, 2001

SAN FRANCISCO--(BUSINESS WIRE)--May 28, 2001 via NewsEdge Corporation -
Pacific Gas and Electric Company released the following statement in response
to today's announcement by the Department of Energy, directing the Western
Area Power Authority (WAPA) to make upgrades to the congested section of the
Path 15 transmission line in Central California:
"As more power plants come on-line in California and the Western states over
the next few years, the transmission system needs to be enhanced to move the
new power to where it's needed. The upgrades to be pursued by the Department
of Energy will help to eliminate the congestion that currently exists, and
provide additional room to move the output from the new power resources that
are planned and under construction in the Western United States.
"We applaud the DOE's efforts to expand Path 15 in order to increase the flow
of electricity between Northern and Southern California. The participation of
the federal government in this upgrade will be of substantial benefit not
only to California, but also to the entire Western grid, particularly in
terms of significantly expediting the permitting process, as well as reducing
the overall project cost.
"Clearly, in addition to California's retail electricity customers, there are
several other groups that stand to benefit from increased Path 15 capacity --
primarily municipally owned utilities, as well as federal and state agencies
like the California Department of Water Resources and the Western Area Power
Authority. Several times over the past decade, Pacific Gas and Electric
Company has attempted to work with these groups on ways to fairly share the
costs and benefits of any upgrade. However, in each case, these interests
have declined to participate in upgrading Path 15, leaving the cost of making
the upgrade to be born only by PG&E's retail customers. In at least one case,
the California Public Utilities Commission determined the effort to upgrade
Path 15 was uneconomic.
"In the meantime, the utility has made several low cost, high benefit
upgrades to Path 15, which have successfully increased its capacity.
Furthermore, earlier this year, the utility performed preliminary
environmental studies that should help expedite the development of an upgrade
of Path 15.
"Pacific Gas and Electric Company looks forward to working with the DOE and
WAPA to accelerate the development of this needed transmission upgrade."
CONTACT: PG&E | News Department 415/973-5930

Editorial Desk; Section A
Chilly Encounter in California

05/30/2001
The New York Times
Page 22, Column 1
c. 2001 New York Times Company
President Bush and Gov. Gray Davis, who are deeply at odds on California 's
energy problems, have one thing in common -- plunging approval ratings among
California 's aggrieved voters. Yesterday's meeting between the two did
little to bridge the gap on energy and may have done even less to improve
their political fortunes.
As expected, Mr. Davis asked Mr. Bush for federal price caps on the soaring
cost of wholesale electricity , and threatened to sue the federal government
if the caps were not forthcoming. According to state estimates, California
paid $7 billion for electricity in 1999, and may pay 10 times that amount
this year. But Mr. Bush refused, repeating his view that caps will make
California 's problems worse in the long run by discouraging new investments
in power plants.
For Mr. Davis, the issue is partly political. He is up for re-election next
year and still has designs on the Democratic presidential nomination. But he
hurt himself by moving too slowly to raise rates on consumers and businesses,
a move rightly urged by the administration to encourage conservation, and he
was unlucky enough to be governor at a time when the state began suffering
the effects of a grievously flawed deregulation plan. Mr. Bush, for his part,
may be able to get along without California , but it is not clear that his
party can. Only one statewide elected official is a Republican, and
California Democrats have targeted several Republican members of Congress
whose defeat in 2002 could weaken if not end Republican control over the
House of Representatives.
The Bush forces say they have done plenty for California , including
expediting federal permits for new plants and ordering conservation measures
at federal facilities. But nothing would help more than a temporary cap on
wholesale electricity prices like the one envisaged in a bill sponsored by
Senators Dianne Feinstein of California and Gordon Smith of Oregon. It would
ease the drain on California 's treasury, release electricity that is
currently being withheld in expectation of higher prices and address the
administration's fears about investment by guaranteeing producers a
reasonable profit.
Mr. Bush stubbornly clings to his position that this is essentially
California 's problem, not Washington's. But if the problem ripples beyond
California 's borders, that stubbornness could cost him support in the nation
at large.

News
Bush, Gov. Davis sound like Texas, California on energy
Vincent J Schodolski and Karen Brandon, Tribune staff reporters Tribune staff
reporter V Dion Haynes contributed to this report
?
05/30/2001
Chicago Tribune
North Sports Final ; N
Page 1
(Copyright 2001 by the Chicago Tribune)
After a day of polite but unmistakable political posturing, President Bush
and California Gov. Gray Davis failed to reach agreement Tuesday on controls
for energy prices in this state caught in a critical electricity shortage.
Davis said he would move quickly to seek relief in federal court.
Bush, who lost California in the 2000 election, made his first trip to the
nation's most populous state since becoming president and left no doubt that
he rejected Democrat Davis' demands for caps on the price of energy--mainly
natural gas from the president's home state of Texas.
"Price caps do nothing to reduce demand and they do nothing to increase
supply," Bush said during a midday address to the Los Angeles World Affairs
Council. The president's comment brought enthusiastic applause from the
audience of more than 1,000, which included a large number of business
people. Davis sat stone-faced a few feet from the rostrum where the president
spoke.
In an earlier appearance, Bush also denounced the posturing surrounding
energy politics.
"Energy debates sometimes throw off some sparks," he said. "But this is no
time for harsh rhetoric. It's certainly no time for name calling. It's time
for leadership and results. It's time to put politics aside."
Bush and Davis had a 35-minute meeting following the president's lunchtime
address in Los Angeles. Afterward Davis made clear he plans to pursue other
approaches in his quest for price controls. While the governor said he and
the president had found areas of common ground, he said there is a major gulf
between the two on prices.
"We still ... have a fundamental disagreement over whether or not California
is entitled to price relief," Davis said after his meeting with the
president. "I don't think it is matter of philosophy, or ideology. It is a
matter of law."
State market `dysfunctional'
"The Federal Electric Regulatory Commission ... made a determination in
November and again Dec. 15 that the California market was dysfunctional,
prices were too high and the terms they used unjust and unreasonable and we
are entitled as a matter of law to some form of price relief," Davis said.
The governor, who has been mentioned as a potential Democratic presidential
contender in 2004, said he was ordering state officials to bring legal action
against the regulatory panel to secure some kind of price relief either in
the form of rebates or controls on the price California is charged for the
natural gas it buys from suppliers in other states.
Davis said suppliers were selling natural gas to New York for $5.95 per
million Btu while charging California $15 for the same amount of gas. The
governor repeatedly has charged that big energy suppliers--many on them based
in Houston and other parts of Texas-- were involved in price manipulation and
gouging. Bush said Tuesday that he would order federal agencies to thoroughly
investigate any charges of gouging
Bush's speech was briefly interrupted three times as protesters demanded a
reduction in energy prices. "Stop the gouging of our economy," one protester
shouted. Another stood on a chair shouting as she held up a banner reading,
"Rate Caps Now."
Earlier, in a speech at Camp Pendleton U.S. Marine Base near San Diego, Bush
announced he would seek $150 million more in aid to help low-income people
struggling with rising energy bills. He already has asked Congress for $300
million for such assistance.
Though Bush's speech was billed as an energy conservation address, he spent
much of his time praising the military for its service and emphasizing the
administration's support of the military, including plans to raise pay and to
improve health benefits and housing.
Bush was more than halfway through his 10-minute speech when he brought up
the subject of energy conservation. He began by praising Camp Pendleton and
federal agencies for heeding his May 3 order to take extra steps to conserve
energy during peak hours. Bush said the Department of Defense committed
itself to reducing its energy consumption by 10 percent during peak hours.
"I'm pleased to report that the military and federal agencies are exceeding
expectations," he said.
Bush said the conservation efforts have saved 76 megawatts per hour during
peak periods, enough for the needs of 140,000 people during peak demand
periods. "That's as many people as live in Pasadena, Calif.," Bush said.
Bush noted that a new car uses half as much gasoline as a 1972 car and a new
refrigerator uses 30 percent of the electricity needed for a 1972 model. "Yet
this conservation progress stalled in the 1990s," Bush said.
Vague on energy tactics
The president also said his administration's energy plan includes 100
recommendations, 40 of them aimed at revitalizing conservation efforts. He
did not specify any of his administration's conservation recommendations.
The president said Energy Secretary Spencer Abraham is working to secure the
permits and easements necessary to clear a clogged section of the
transmission grid between Southern and Northern California .
California 's energy crisis has been caused by several factors, most related
to the flawed way in which the state deregulated the electricity industry in
the mid-1990s. An element of that deregulation plan prohibited the state's
major power corporations from passing on increases in their costs to
consumers. When the price of natural gas skyrocketed earlier this year,
companies were force to borrow huge sums to buy the power they needed to
supply customers.
Pacific Gas and Electric, the state's largest utility, was forced to seek
federal bankruptcy protection. The state's second-largest supplier, Southern
California Edison, teeters on the verge of insolvency.
California has spent billions of dollars from the state's budget surplus to
buy needed energy. Davis said Tuesday that the state spent about $7 billion
on energy supplies in 1999, then $27 billion in 2000 and now expects to spend
more than $50 billion in 2001 despite a drop in consumption of around 10
percent.

Bush's visit to California draws protest over energy
LEON DROUIN KEITH, Associated Press Writer
Wednesday, May 30, 2001
,2001 Associated Press
URL:
http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/05/30/state1
217EDT0155.DTL&type=news
(05-30) 00:01 PDT LOS ANGELES (AP) --
Though he was generally out of sight, the hundreds of protesters who dogged
President Bush's California visit hoped they made enough noise to give him an
earful of their unhappiness with the state's electricity crisis.
Protesters from the state Democratic Party, the Green Party and
environmental, consumer and socialist organizations all called on Bush to
support capping energy prices that have soared since deregulation took effect
in California last year.
Bush, who remained out of sight to most protesters, told Gov. Gray Davis
during a brief face-to-face meeting Tuesday that he wouldn't do that.
Protesters were expected to raise environmental issues Wednesday when the
president continues his California tour with a visit to Sequoia National Park
where he is expected to discuss his commitment to the environment.
Members of the Sierra Club planned to line the entrance road to the park to
get out their message: These are "our lands, not oil lands."
"We've got to stop the gouging and work towards a cleaner, more sane energy
policy," June Brashares of Global Exchange, an environmental and labor
organization, said Tuesday.
She and her father, Bob Brashares, a 74-year-old retired minister from
Escondido, were among about 100 protesters who waved signs and shouted in
support of electricity rate caps outside the Camp Pendleton Marine base when
Bush visited on Tuesday.
Later Tuesday, about 300 people gathered outside the Century Plaza Hotel as
Bush spoke to the Los Angeles World Affairs Council. Many were concerned
about the environment and urged the president to find alternatives such as
solar power.
"There's no supply problem with the sun," said Tonia Young, 42, who also came
to protest the rising energy prices that are giving Californians utility bill
shocks.
Ending dependence on traditional power was a common theme through the day.
"We've got to free ourselves from the shackles of the energy companies," said
Peter Dudar as he banged a drum.
A handful of Republicans and Bush supporters drew boos from the crowd.
Bush supporter Carol Gordon said that to solve the energy crisis California
officials should "stop all this ecology crap" and run power plants 24 hours a
day.
Some protesters also got into a shouting match with Ron Cabrera Jr., a
Libertarian holding a placard supporting Bush and Vice President Dick Cheney.
"We should protect the environment but we shouldn't do it at the expense of
our people," said Cabrera.
,2001 Associated Press ?

P-G-and-E asks court for permission to pay $17.5 million in bonuses

Wednesday, May 30, 2001
,2001 Associated Press
URL:
http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/05/30/state0
358EDT0108.DTL&type=news
(05-30) 00:58 PDT SAN FRANCISCO (AP) --
Pacific Gas and Electric Company has asked a federal court for permission to
pay out $17.5 million in bonuses to the management team that guided the
utility into bankruptcy.
PG&E made the filing late Friday before the long holiday weekend.
The utility says it requires the bonuses for a "management retention
program."
But an attorney for The Utility Reform Network says PG&E is simply rewarding
managers of a failed business effort.
"It's remarkable," said TURN's Mike Florio. "They're just showering money on
the same people who got them in this mess.
If Judge Dennis Montali approves PG&E's bankruptcy plan, several senior vice
presidents at the utility would receive additional payments matching their
base salaries, according to the company's chairman Robert Glynn.
Those payouts would come on top of $50 million in bonuses and raises PG&E
awarded just before the April 6 bankruptcy filing.
,2001 Associated Press ?

Developments in California's energy crisis
The Associated Press
Wednesday, May 30, 2001
,2001 Associated Press
URL:
http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/05/30/state1
055EDT0165.DTL&type=news
(05-30) 07:55 PDT (AP) --
Developments in California's energy crisis:
WEDNESDAY:
No power alerts Wednesday as electricity reserves stay above 7 percent.
TUESDAY:
* President Bush rejects energy price caps in meeting with Gov. Gray Davis.
The governor says he and Bush disagree on whether California is entitled to
price relief.
* Bush's speeches to Marines at Camp Pendleton and a world affairs group in
Los Angeles trigger protests by political and consumer activists.
* The 9th U.S. Circuit Court of Appeals declines to order federal energy
regulators to cap wholesale electricity prices. In a brief statement, a
three-judge panel says the appeal by state Senate Leader John Burton and
Assembly Speaker Robert Hertzberg "does not warrant intervention of this
court."
* Assembly leaders file a response to the Federal Energy Regulatory
Commission order that offers limited price controls, in exchange for
California joining a regional transmission organization. The Assembly is
asking for price caps during all hours, not just when electricity reserves
fall below 7.5 percent, as the FERC order offered.
* Supporters of proposed initiative that would allow cities, counties or
municipal districts to buy and store natural gas have 150 days to collect
670,816 signatures. If supporters collect the needed signatures, the proposed
initiative would be on the March 2002 ballot.
* No power alerts as electricity reserves stay above 7 percent.
WHAT'S NEXT:
* Davis' representatives continue negotiating with Sempra, the parent company
of San Diego Gas and Electric Co., to buy the utility's transmission lines.
* U.S. Bankruptcy Judge Dennis Montali continues to hear from PG&E's
creditors this week, including small generators throughout the state
concerned they won't be repaid millions the bankrupt utility owes them for
past power deliveries. The generators are asking Montali to let them sell
their electricity on the wholesale market instead. Critics say the loss of
their low-priced megawatts would force the state to spend even more buying
power for the customers of the state's three largest utilities.
THE PROBLEM:
High demand, high wholesale energy costs, transmission glitches and a tight
supply worsened by scarce hydroelectric power in the Northwest and
maintenance at aging California power plants are all factors in California's
electricity crisis.
Edison and PG&E say they've lost nearly $14 billion since June to high
wholesale prices the state's electricity deregulation law bars them from
passing on to consumers. PG&E, saying it hasn't received the help it needs
from regulators or state lawmakers, filed for federal bankruptcy protection
April 6.
Electricity and natural gas suppliers, scared off by the two companies' poor
credit ratings, are refusing to sell to them, leading the state in January to
start buying power for the utilities' nearly 9 million residential and
business customers. The state is also buying power for a third investor-owned
utility, San Diego Gas & Electric, which is in better financial shape than
much larger Edison and PG&E but also struggling with high wholesale power
costs.
The Public Utilities Commission has approved average rate increases of 37
percent for the heaviest residential customers and 38 percent for commercial
customers, and hikes of up to 49 percent for industrial customers and 15
percent or 20 percent for agricultural customers to help finance the state's
multibillion-dollar power buys.
,2001 Associated Press ?

PG&E wants OK to double top executives' pay
Court asked to approve $17 million in bonuses
David Lazarus, Chronicle Staff Writer
Wednesday, May 30, 2001
,2001 San Francisco Chronicle
URL:
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/30/M
N162885.DTL&type=news

Just weeks after handing out $50 million in bonuses while on the verge of
financial collapse, PG&E is asking a judge's permission to award $17.5
million in additional payouts to the management team that guided the utility
into bankruptcy.
Pacific Gas and Electric Co. made the surprise filing in federal court late
Friday, just ahead of the three-day holiday weekend.
Consumer advocates reacted yesterday with astonishment.
"It's remarkable," said Mike Florio, senior attorney for The Utility Reform
Network in San Francisco. "They're just showering money on the same people
who got them into this mess."
PG&E said it requires the bonuses for a "management retention program"
intended to prevent about 226 top executives from departing during the
bankruptcy process.
The company's chairman, Robert Glynn, and nearly two dozen other senior
executives would receive additional payments of 100 percent of their base
salaries if Bankruptcy Judge Dennis Montali approves the plan.
PG&E also is requesting that hundreds of other managers be eligible for
bonuses of between 25 percent and 75 percent of their salaries. A hearing is
scheduled for June 18.
First, however, PG&E will have to get past a meeting with creditors of the
bankrupt utility to be held June 7 in San Francisco.
The sudden awarding of millions of dollars in bonuses is expected to be a key
topic of discussion.
$50 MILLION ALREADY AWARDED
"That's money that the creditors think they're entitled to," Florio said.
"I'm sure there's going to be some push-back on this one."
The payouts would be on top of the $50 million in bonuses and raises awarded
just before PG&E's April 6 bankruptcy filing. The utility argued then, as
well, that the money was necessary to keep senior managers from leaving.
This time, PG&E also put a consumer-friendly spin on its generosity to its
top brass.
"The loss of important personnel due to economic uncertainty or sagging
employee morale may threaten PG&E's continued provision of safe, reliable and
responsive service to its customers and jeopardize its reorganization
efforts, " the utility said in its filing.
Greg Pruett, a PG&E spokesman, was more explicit about the need for
additional bonuses.
"It's necessary to keep senior management from jumping ship and going to a
competitor," he said.
PUBLIC RELATIONS PROBLEM
Pruett said that the utility is prepared to shrug off the public relations
hit inevitable with any such request under Chapter 11 proceedings.
"As much as you care about public opinion, you have to take the long view,"
he said.
PG&E filed for bankruptcy protection after amassing more than $9 billion in
debt because of California's bungled deregulation effort. The utility said it
had no choice after the collapse of bailout talks with Gov. Gray Davis.
"The bankruptcy itself was outrageous," said Linda Sherry, a spokeswoman for
Consumer Action in San Francisco. "It's completely preposterous to give these
people a reward for what they've done."
PG&E made a special point of observing last month that senior managers of the
utility's parent company received no bonuses in 2000 because of the company's
lackluster financial performance.
Glynn, chairman of both the parent company and the utility, was forced to get
by with a raise of $100,000, bringing his total annual salary to $900,000. In
1999, he earned $800,000 in salary and $1.2 million in bonuses.
PAY WOULD REACH $2 MILLION
If the new bonuses are approved, Glynn's compensation would return to the $2
million range.
Glynn's standing with PG&E's board of directors appears unblemished despite
the utility's financial meltdown and billions of dollars in losses incurred
by the parent company. But concern has grown within the company that other
managers may be on verge of calling it quits.
Still, with layoffs rampant in the technology industry, it would seem there
is no shortage of skilled managers looking for work should PG&E suddenly find
itself with vacancies to fill.
But Eric Wheel, general manager of Management Recruiters of Northern
California, an executive-search service, said it would be difficult to find
people with the necessary expertise to run a major utility, especially one in
the midst of bankruptcy.

E-mail David Lazarus at dlazarus@sfchronicle.com.
A fast-growing compensation package
   To discourage senior executives from leaving, PG&E asked the bankruptcy
court for permission to award millions of dollars in bonuses. A handful of
top
managers, including Chairman Robert Glynn, would see their paychecks double.

                     Number           Bonus
Management        receiving     (Percent of
level               bonuses    base salary)

Senior officers           6            100%
(Including Chairman
Robert Glynn)

Other executives         17            100%

Directors and            77      50% to 75%
main attorneys

Managers and other      126      25% to 50%
attorneys
.
Source: PG&E
.
Chronicle Graphic

,2001 San Francisco Chronicle ? Page?A - 1

Davis threatens to sue regulators to get price limits
Lynda Gledhill and Robert Salladay, Chronicle Staff Writers
Wednesday, May 30, 2001
,2001 San Francisco Chronicle
URL:
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/30/M
N144024.DTL&type=news

Sacramento -- Gov. Gray Davis said yesterday that he will sue federal
regulators if they refuse to impose temporary price controls on electricity
sold into the state.
Davis, speaking after his meeting with President Bush, said it is clear that
deregulation is not working when Californians are spending $50 billion on
electricity this year -- 700 percent more than they spent two years ago.
"I will pursue every recourse available to me," Davis said. "I explained to
the president that if he were governor, like I, he would be doing everything
in his power to fight for the 34 million people getting a raw deal."
Davis' threat of legal action came as a lawsuit by California lawmakers
requesting price controls was denied an emergency hearing by a three-judge
panel of the U.S. Court of Appeals in San Francisco.
The panel issued a terse, unanimous order yesterday, saying that the
lawmakers had failed to show the need for emergency court intervention to
install price controls on electricity. Lawmakers will appeal the decision to
a larger panel of the court's judges, perhaps as soon as Friday.
State Senate President Pro Tem John Burton, D-San Francisco, Assembly Speaker
Robert Hertzberg, D-Sherman Oaks, and the city of Oakland argued that the
Federal Energy Regulatory Commission had violated its duty to maintain "just
and reasonable" prices for wholesale power.
Davis said he hopes that the federal commission reverses itself and decides
to implement price limits. On Friday, the Davis administration filed a
request for a rehearing on a regulatory commission order that implements
price controls only during power supply shortages.
"Once they have time to reflect on the filing, the lawsuit will be considered
ripe," Davis said.
Davis and other supporters of price controls argue that the federal
regulators have to take action because the commission has already declared
that prices in California are "unjust and unreasonable."
Davis wants Bush to order his two new appointees to the regulatory commission
to take up the issue. However, Bush has said repeatedly that he does not
believe that price limits will help California.
E-mail Lynda Gledhill at lgledhill@sfchronicle.com and Robert Salladay at
rsalladay@sfchronicle.com.
,2001 San Francisco Chronicle ? Page?A - 8