Representatives from a dozen merchant generators met with California Gov. Gray Davis for four hours late Wednesday in discusssions that one participant characterized as “cordial and candid,” but the result only reinforced differences between the state and electricity suppliers, whom the governor has characterized as “gougers.” The only clear agreement among the participants was to maintain daily contact with the governor and his staff to keep a dialogue going.

Davis emphasized his request for the generators to accept partial payment on their unpaid wholesale power bills and for the their support in talking California’s legislature into passing legislation to implement the governor’s memorandum of understanding (MOU) with Southern California Edison Co. But the generators for the most part are cool toward either proposition.

Reliant Energy, which estimates its current unpaid bill is about $340 million, strongly opposes the idea of taking less money, and harbors “major concerns” about the governor’s MOU with Edison, according to Richard Wheatley, a Houston-based spokesperson who was in Sacramento this week with Reliant executives. They left the governor with two proposals — one for a sale of up to 2,500 MW over five years at a fixed rate of 2 cents/kW and another related to selling “negawatts” by paying large interruptible customers for shutting down during peak-demand times.

“What we’re calling the Little Sacramento Summit was constructive and frank, and we’re hoping that the discussions going forward can remain constructive in tone,” said Wheatley. He noted, however, that the governor, in a press conference after the session in his Capitol offices, emphasized he is still pursuing the investigations of alleged market manipulation by the generators and thinks that some “haircut” (forgiveness of part of the past-due billings) needs to be accepted by the generators. The latter is the type of “finger-pointing” Reliant and other generators are trying to have dropped.

Saying that Reliant continues to be concerned about creditworthiness of California and its major utilities, Wheatley said that his company has various new power plant proposals for the western grid totaling $1.4 billion and 2,300 MW, including a new plant in California. However, the company is holding up moving ahead with a formal application on the California plant pending resolution of the current issues.

Wheatley said that the group of stakeholders needs to be expanded as the discussions move forward, including other major sellers into the California market, such BC Hydro in Canada and the Los Angeles’ municipal utility.

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