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Best, Jeff | dev33 |
I'll talk to Steve and get back to you. | dev33 |
That work? | dev33 |
Scott: Could you forward a copy to me and Bill? | dev33 |
Thanks. | dev33 |
Best, Jeff | dev33 |
FYI: The City of Long Beach has now joined in the law suits. | dev33 |
They've sued SoCalGas and El Paso claiming (like the others who've sued) that the two conspired to "kill competition" and drive up prices. | dev33 |
I think that we can expect that topic to get some airtime, since the TURN's, Harvey's, UCAN's etc. of the world will likely be steering all the Democrats. | dev33 |
I'll throw some questions together; but won't be till the end of the day. | dev33 |
Best, Jeff | dev33 |
Utilities' Demand Blocks Bailout NEGOTIATIONS HIT SNAG: PG&E, Edison want end to price freeze if they sell transmission lines to state David Lazarus, Chronicle Staff Writer Wednesday, March 21, 2001 ,2001 San Francisco Chronicle URL: California's near-bankrupt utilities are demanding that higher electric rates be a part of any deal to sell the state their power lines, The Chronicle has learned. | dev33 |
A rate increase -- perhaps of more than 50 percent, according to earlier industry estimates -- would certainly draw a firestorm of protest from consumer groups and force Gov. Gray Davis to backtrack from earlier pledges that rates would remain unchanged. | dev33 |
Nevertheless, sources close to negotiations on the deal said Pacific Gas and Electric Co. and Southern California Edison are attempting to make higher rates a condition for agreeing to a bailout scheme in which they would sell the state their transmission systems and some land. | dev33 |
The sources said the talks hit a new snag this week when state officials realized that fine print sought by the companies could require the Public Utilities Commission to pass along all of the utilities' costs to ratepayers. | dev33 |
The sources said this would end a rate freeze that shields consumers from runaway wholesale electricity prices. | dev33 |
The inclusion of potential rate increases in the talks reflects the growing complexity of a deal originally intended by Davis to stabilize the finances of PG&E and Edison so banks would resume loans to the cash-strapped utilities. | dev33 |
The negotiations subsequently have expanded to involve a state purchase of the utilities' transmission networks and acquisition of utility-owned land, including spectacular coastal property near PG&E's Diablo Canyon nuclear power plant. | dev33 |
Now they also have embraced further deregulation of California's dysfunctional electricity market. | dev33 |
"Clearly, one of the terms being discussed is the regulatory environment," said Joseph Fichera, head of Saber Partners, a New York investment bank that is advising Davis in the talks. | dev33 |
"The past situation has not worked well," he added. | dev33 |
"The utilities want some certainty about their future." | dev33 |
TENTATIVE DEAL WITH EDISON To date, the governor has announced a tentative agreement with Edison for the state to buy the utility's power lines for almost $3 billion. | dev33 |
Discussions with PG&E for a similar accord have dragged on for weeks. | dev33 |
An Edison official, asking that his name be withheld, acknowledged yesterday that an end to the rate freeze is an expected result of the power- line sale. | dev33 |
"Once the details of the pact are complete, dominoes will fall," the official said. | dev33 |
"One of the dominoes is the rate freeze." | dev33 |
A PG&E spokesman declined to comment. | dev33 |
In fact, both Edison and PG&E have been aggressively seeking an end to the rate freeze for months. | dev33 |
The two utilities have a lawsuit pending in federal court demanding that the PUC immediately raise rates so the utilities can recover almost $13 billion in debt accrued as a result of the freeze. | dev33 |
"They have been trying a lot of things to get the rate freeze ended in various forms," said Carl Wood, who sits on the PUC. | dev33 |
"Adding it to the present talks is consistent with past behavior." | dev33 |
Wall Street has taken note that the negotiations no longer appear to be making progress. | dev33 |
Paul Patterson, an energy industry analyst at Credit Suisse First Boston, told clients on Monday that the discussions "may have lost some momentum in recent days." | dev33 |
He did not give a reason. | dev33 |
For his part, the governor sounded unusually cautious about the course of the talks when asked late last week if a breakthrough was imminent. | dev33 |
SECRET STICKING POINTS "We are going to take the transmission systems and the land that's deeded, and we will work out an agreement," Davis said at an appearance in San Jose. | dev33 |
"But there are a number of sticking points in the talks with PG&E that I'm not going to reveal." | dev33 |
One of those sticking points apparently is an insistence that the sale of utility assets include a long-sought lifting of the rate freeze. | dev33 |
Sources said lawyers from both PG&E and Edison had inserted the related terms into draft accords affecting each utility, and that the full impact of the additions was not realized by state officials until this week. | dev33 |
One source said the language was just convoluted enough to slip beneath the radar screen of state negotiators. | dev33 |
But the upshot, once the words had been parsed, was that the PUC effectively would lose control over power rates. | dev33 |
CREDITWORTHINESS ON THE TABLE In Edison's case, the terms of the tentative deal include the governor asking the PUC "to support the creditworthiness" of the utility. | dev33 |
"This would ensure that future investments in both utility distribution and utility generation plants are provided fair returns of and on capital, consistent with current authorized returns and capital structure provisions," it says. | dev33 |
Sources said the provision could be interpreted as a guarantee from the state that Edison would be permitted to recoup all outstanding costs from ratepayers. | dev33 |
"There may be some assumptions about this language that the rate freeze ends if it is adopted," the Edison official said, adding that he saw no reason to disagree with such assumptions. | dev33 |
But Fichera, Davis' adviser in the talks, insisted that nothing is set in stone, and that the negotiations are proceeding without a hitch. | dev33 |
"This is a very complex transaction," he said. | dev33 |
"God and the devil are in the details." | dev33 |
E-mail David Lazarus at dlazarus@sfchronicle.com. | dev33 |
Check out the poll at this URL regarding how folks feel about rate increases. | dev33 |
Best, Jeff | dev33 |
PUC considers rewarding producers that sign long-term contracts Greg Lucas, Lynda Gledhill, Chronicle Sacramento Bureau Wednesday, March 21, 2001 ,2001 San Francisco Chronicle URL: Sacramento -- Some cash-strapped producers of wind, solar and other alternative forms of energy will get long-delayed financial relief under a proposed order by state regulators, Gov. Gray Davis said yesterday evening. | dev33 |
A proposed order by the Public Utilities Commission is designed to reward energy producers who sign long-term contracts with utilities at lower rates. | dev33 |
Alternative energy producers that voluntarily enter such contracts, which would start on April 1, would be paid within 15 days, said Davis, who requested the order. | dev33 |
Those that do not would have to wait until the utilities that buy their power return to solvency. | dev33 |
Davis blasted Pacific Gas & Electric Co. and Southern California Edison for not paying the alternative generators -- know as qualified facilities, or "QFs" -- even though the companies have been collecting money through rates. | dev33 |
"It is wrong and irresponsible of the utilities to pocket and withhold the money designed to compensate the QFs," Davis said. | dev33 |
"It's immoral and has to stop." | dev33 |
Alternative producers -- ranging from massive co-generation facilities at oil refineries to tiny biomass plants -- produce about a third of the state's supply of electricity. | dev33 |
But many are shutting down because utilities have not paid them since November. | dev33 |
The loss of some 3,000 megawatts from tapped-out alternative energy producers contributed to the blackouts that snarled California yesterday and Monday, according to the Independent System Operator, which manages the state's power grid. | dev33 |
The PUC's proposed order -- which will be considered at the board's Tuesday meeting -- offers the generators a choice of agreeing to a five-year contract at $79 per megawatt or a 10-year deal at $69 per megawatt, Davis said. | dev33 |
The order does not address the more than $1 billion already owed to the more than 600 alternative energy producers around the state. | dev33 |
Davis said to favor one creditor over another in past debt could bring on bankruptcy proceedings from other creditors. | dev33 |
The Legislature would also need to act to make the order work. | dev33 |
"It is critical to keep these facilities up and online," said Sen. Debra Bowen, D-Marina del Ray, who estimates that Edison has $1.5 billion in cash on hand, and PG&E $2.5 billion. | dev33 |
"The utilities owe it to the people of the state to pay them." | dev33 |
Edison said yesterday that it opposed any attempt to place alternative producers ahead of their other creditors. | dev33 |
But Tom Higgins, a senior vice president for Edison International, which owes alternative producers some $835 million, said his company was talking to the governor's office about possible payment structures. | dev33 |
Alternative energy producers, particularly those that use high-priced natural gas to fire their generators, say that without an immediate infusion of cash they must close their plants. | dev33 |
"We've been obsessed with the health of the utilities and (have) forgotten the health of everyone else," said V. John White, legislative director of the Clean Power Campaign, which lobbies for alternative energy producers. | dev33 |
CalEnergy Operating Corp., which operates eight geothermal plants in the Imperial Valley producing 268 megawatt hours for Edison has sued the utility asking to be paid and to be temporarily released from their contract with Edison which has paid them nothing since November. | dev33 |
CalEnergy has a court hearing tomorrow on its Edison contract. | dev33 |
Edison owes the company $75 million, and the debt increases by $1 million a day. | dev33 |
"We've lived up to our end of the bargain but Edison hasn't. We're now not in a position to make a property tax payment on April 10 and we're the largest employer in the county," said Vince Signorotti, CalEnergy's property manager. | dev33 |
Unlike Edison, PG&E is paying its creditors 15 cents on the dollar. | dev33 |
"We have offered over the past five days to prepay for future power not yet delivered to keep as many of them operating as possible, but the state needs to decide how its going to divvy up the limited money under the frozen rates," said John Nelson, a PG&E spokesman. | dev33 |
The PUC's sudden attempt to recast the rates paid to alternative generators comes after several months of inaction, partly a result of waiting for legislative negotiations on the issue to conclude. | dev33 |
Those negotiations eventually failed to move forward. | dev33 |
E-mail Greg Lucas at glucas@sfchronicle.com and Lynda Gledhill at | dev33 |
California governor blames utilities for blackouts By JENNIFER COLEMAN, Associated Press Gov. Gray Davis said the state's two largest utilities are partly to blame for this week's widespread blackouts because they failed to pay millions of dollars owed to environmentally friendly power generators. | dev33 |
Davis said the utilities took money from customers while failing to pay the alternative plants, which use renewable forms of energy like steam and natural gas to generate electricity. | dev33 |
The state has been spending about $45 million a day since January to buy power for customers of Southern California Edison and Pacific Gas and Electric Co., which are so credit-poor that suppliers refuse to sell to them. | dev33 |
"It's wrong and irresponsible of the utilities to pocket this money and not pay the generators," the governor said at a Capitol news conference Tuesday. | dev33 |
"They've acted irresponsibly and immorally and it has to stop." | dev33 |
The state lost about 3,100 megawatts, or enough electricity to power 3.1 million homes, on Tuesday from alternative energy plants that say they can't afford to keep operating because the utilities haven't paid their bills in weeks. | dev33 |
Davis said the PUC planned to issue an order next week directing the utilities to pre-pay future bills to the alternative plants. | dev33 |
PG&E called Gray's statements "inappropriate and unjustified," adding that it was negotiating a payment plan with the suppliers. | dev33 |
Edison said it is intent on paying creditors and working with the Public Utilities Commission to pay the plants for future power sales. | dev33 |
Edison and PG&E say they have lost more than $13 billion since last June to climbing wholesale electricity prices, which the state's 1996 deregulation law prevents them from passing on to ratepayers. | dev33 |
Keepers of the state's power grid were cautiously optimistic that California might get through Wednesday without another day of rolling blackouts after two idle plants were returned to service. | dev33 |
"Never say never - but it appears we are going to be in better shape tomorrow (Wednesday) and for the rest of the week," said Patrick Dorinson, a spokesman for the California Independent System Operator, which oversees most of the state's power grid. | dev33 |
About a half-million customers were hit by Tuesday's blackouts, which snarled traffic and plunged schools and businesses into darkness from San Diego to the Oregon border. | dev33 |
On Tuesday, Assembly Republican leader Bill Campbell called on PUC President Loretty Lunch to resign. | dev33 |
Lynch was appointed by Davis. | dev33 |
Lynch couldn't be reached for comment, but a spokesman for the governor dismissed Campbell's complaints. | dev33 |
Meanwhile, a leading lawmaker on energy issues said the PUC may soon have to raise rates by about 15 percent to cover the state's costs and its utilities' bills. | dev33 |
"My sense is that people will appreciate having some certainty and being able to plan for it," said Assemblyman Fred Keeley. | dev33 |
"They don't have to like it, but I think they'll appreciate it." | dev33 |
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