CA Power Crisis Continues In Courts, Legislature
In the nothing-is-really-settled department, the State of
California was preparing to intervene today in a federal district
court in Los Angeles that has been asked to raise utility rates to
cover the unpaid costs of wholesale power.
At the same time, negotiations on a settlement with the
utilities involved in the state's power crisis will continue and
state legislative hearings on the utilities' financial condition
will be held early this week in Sacramento with the hope of a
"conceptual" solution by the end of next week, according to the
governor's chief press spokesperson.
State policymakers on Friday were seemingly unconcerned about
the possibility of the federal judge ordering state regulators to
raise utility rates. "Everyone knows whatever the decision is, it
will be appealed," said spokesman Steve Mavigilio, who noted no
anticipated settlement would be forthcoming over the weekend.
Despite continuing power alerts and the lifting at mid-week of
the federal government's emergency order requiring power to be sold
into the state, the power supply appeared to be adequate last week,
thanks in part to a court injunction requested by the Cal-ISO
requiring Reliant Energy, AES Pacific, Williams and Dynegy to
continue supplying the state. The Cal-ISO requested the injunction
when the federal mandate expired and the federal judge in this case
set the injunction to continue until Feb. 16.
Negotiations between Gov. Gray Davis' team headed by a former
utility executive and the two utilities last week were centered on
what the two energy companies would give to the state in return for
state-backed financing to cover some part of their mounting debts,
estimated around $12 billion and rising.
"So far most of the so-called negotiations are mostly 'talk'
about the talks," said a PG&E utility spokesperson in San
Francisco, who was not optimistic Friday that any resolutions were
close at hand.
And in another action, Duke Energy filed a lawsuit against
Davis' action earlier this month commandeering the defaulted
short-term forward spot contracts relinquished in the defunct
California Power Exchange by the two utilities.
Davis and his Democratic-controlled state legislature addressed
the state's precarious electricity supply situation with various
proposals to greatly increase both conservation and in-state
generating capacity by this summer, so the focus at week's end
turned to the two financially neutered utilities, whose leaders
were giving grudging indications that they might sell some of their
infrastructure assets, such as their 26,000 miles of transmission
lines and interconnections if they received what they considered
fair market value.
Michael Peevey, the former Southern California Edison president
who is the governor's chief negotiator, indicated late Thursday
that he thought the utilities were warming up to the idea of
selling off assets and perhaps giving some stock options through
state-backed warrants, too.
"We anticipate that we will be negotiating over this weekend," a
spokesperson for Southern California Edison said Friday. Meanwhile,
the CEO's of the parent companies and two utilities appeared at a
state legislative oversight hearing Friday in Sacramento, which
attempted to grill regulators, utilities and other stakeholders on
the causes and effects of the state's lingering electricity woes.
Last week was marked by Davis and the state Assembly leader
Thursday announcing multiple new laws to push accelerated
generation and conservation efforts that are envisioned to unfold
at a frenetic pace in the weeks and months ahead.
As part of the actions, including a half dozen executive orders
and proclamations, the governor sent letters to President Bush and
FERC Chairman Curt Hebert, seeking various federal actions that
will help facilitate the state's all-out generation and
conservation efforts aimed at heading off rolling blackouts this
Permitting Requirements Relaxed
Key to the varied proposals is a massive relaxation of
permitting requirements by various state and federal agencies.
In a wide assortment of moves, including putting a SoCal Edison
power plant operations executive in charge as the state's "energy
construction czar," Davis committed the state to: (a) streamlining
the siting of new temporary peaking generation plants through the
state water resources department; (b) accelerating baseload plant
construction through bonuses and cutting red tape; (c) maximizing
the output of existing plants; (d) providing economic incentives
through rebates and tax breaks to renewable energy and distributed
Citing his Jan. 17 declaration of an energy emergency in the
state, Davis asked President Bush to have the federal permitting
process streamlined for the siting and operation of power plants in
the state. Davis also wrote FERC's Hebert to ask for a further
extension of an existing waiver regarding FERC-mandated operating
and efficiency standards for qualifying facility (QF) cogeneration
plants. The governor asked for the waiver now in effect through
April 30 to be extended through Oct. 15.
Only a few hours earlier, Democratic state legislative leader of
the Assembly Robert Hertzberg unveiled a package of nine proposed
pieces of state legislation --- four designed to increase supply by
up to 7,600 MW over the next four years, and the rest aimed at
increased conservation programs that would eventually save the
equivalent of 1,200 MW, including 500 MW by this summer.
The proposed new laws include:
on-site generation incentives through a $50 million program;
renewable generation incentives totaling $150 million;
faster local generation plant siting for plants up to 100 MW,
including removing the state energy commission from the process for
these plants, many of which would be peaking facilities;
requiring new baseload power plants in the state to sign
contracts with the state for their output.; and
conservation measures which would provide more incentives for
residences, schools and government facilities to replace
inefficient appliances and equipment, and spend $100 million to
establish a statewide brigade of community nonprofit agencies to
distribute low-energy light bulbs to residences.
Generators Form Creditors Committee
Late Friday three of the largest power producers currently being
stiffed by the Cal-ISO and the utilities, Reliant Energy, Dynegy
and Mirant, said they are forming a creditors committee to explore
options for receiving payment. The group's move is in response to
what they characterized as slow progress toward the implementation
of a comprehensive long-term solution to California's electricity
"Our goal for many months has been to keep electricity flowing
to Californians, and we remain committed to that objective." But,
"we are troubled over the pace of progress toward a comprehensive
solution, As publicly held companies, we have a responsibility to
our respective shareholders and must now examine our alternatives."
Richard Nemec, Los Angeles