California’s closely watched entry into the long-term, bulkpower market turned up 39 bidders at an average 6.9 cents/kWhprice, the governor’s office reported late Wednesday, as the stategovernment finished its whirlwind 27-hour, sealed-bid powerauction.

Gov. Gray Davis said the state received a “very representativebid with a good deal of power bid for, and it was a very goodsample, certainly one that gives us all optimism.”

Tom Hannigan, director of the state water resource departmentwho oversaw the auction, said the state obtained “a useful sampleacross all times of the day across the spectrum of the year, and weare quite pleased with the initial results. I look forward tolooking through bids and developing some long-term contracts. Ourfundamental responsibility here is to purchase power at the bestpossible prices for consumers and businesses.”

On Wednesday as the bids from the Internet-based auction wereinitially accessed, Davis said he expected a new law from the statelegislature by Feb. 1, giving the state authority to consummatedeals involving the best of the bids received in thequick-turnaround auction.

The bids covered six-month, three-, five- and 10-year durations.Hearings in Sacramento continued on the omnibus new law(s) thatwould give the state long-term buying authority, and also decidehow to handle operation of the utility hydroelectric generationsystem and over-market purchased power contracts with so-called”qualifying facilities” (QFs).

Bidders, utilities and other market participants expressedinitial enthusiasm for the state’s new program, with SanDiego-based Sempra’s CEO telling the financial community Thursdaythat he is “encouraged” by the state auction.

“We don’t yet have detailed information on the bids in the firstround — and in my opinion that’s what it is, a first round —but from what the governor has said, I am quite encouraged that weare going to see power allocated to the three utilities at belowthe costs that they have recently been paying in the wholesalepower market,” said Sempra’s Stephen Baum. “That should ease thefinancial situation of all three utilities and give us greaterliquidity, opening the way to further measures being discussed,such as securitization of uncollected balances.”

California’s governor also pushed ahead on several other fronts,announcing three new energy-related advisors plucked from thepublic and private sectors: Mike Peevey, a former utility presidentturned-successful-energy startup entrepreneur; S. David Freeman,general manager of the nation’s largest municipal utility and aveteran of more than four decades in public power; and Frank Zarb,NASDAQ Stock Market CEO and a former top-level energy adviser inPresidents Nixon and Ford administrations in Washington, D.C. inthe 1970s.

Peevey, whose wife was elected to the state legislature inNovember, will serve as Davis’s energy adviser; Freeman will helpthe state water resources department develop long-term powercontracts and Zarb will advise Davis on energy finance and marketissues.

Also on Wednesday, Davis announced the newly created five-memberpolitically appointed board for the state-chartered transmissiongrid operator (Cal-ISO) held its first meeting. It replaces a26-member industry stakeholder board that Davis has regularlycriticized for representing energy companies rather than consumers.The new members include close aides to the governor, such as hisbusiness/transportation cabinet-level secretary, head of the stateElectricity Oversight Board, and his senior policy adviser, alongwith a veteran consumer group attorney and the chief staff personat the Silicon Valley Manufacturing Group.

A California-based spokesperson for Duke, Tom Williams,confirmed that his company participated in the auction and that itsbids are “all contingent on coming to agreeable credit terms.”Reliant also reportedly participated in the auction.

“The balls in the state’s court now,” Williams said. In additionto announcing it had made “credible bids” in the state waterresources department-run electricity auction, Duke noted thatpre-scheduled outages of two power plant units to upgrade their airemission controls — one each at Moss Landing and San Diego’sSouth Bay — were nearing completion and would be back the end ofJanuary (Moss) and March respectively.

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