With water tables rising and court rulings going the state’sway, California began the week Monday on a more upbeat note thanany time this year. A federal court ruling late Friday assuredemergency real-time supplies will be available to the statetransmission grid operator, Cal-ISO, at least through March 19,prompting the governor while on a political trip to Washington,D.C., to issue a reaction praising the federal judge for his “wiseand thoughtful decision.”

Another federal judge is scheduled today or Wednesday to take upthe requests of Enron Corp. and Avista Corp. to force the nowessentially defunct California Power-Exchange (Cal-PX) to ceaseusing the two companies letters of credit to pay some of the billsof the two nearly bankrupt investor-owned utilities. The LosAngeles federal judge is likely waiting for the Federal EnergyRegulatory Commission to take some action on this and other issues,and will probably postpone any action again this week, said aspokesperson for the Pasadena, CA-based Cal-PX.

While in the nation’s capital, Gov. Gray Davis pointed toward asigned agreement with Southern California Edison expected by theend of this week, and progress in the state’s now month-old effortsto secure long-term power contracts. In the meantime, merchantgenerators, “have agreed to continue to comply with any emergencydispatch orders by the Cal-ISO” as a result of an agreement in aCalifornia federal court case last Friday. Reliant Energy agreed totemporarily continue deliveries without payment to the Cal-ISOwhile the case is argued before FERC. Reliant, Duke Energy, Dynegy,Mirant And Williams have asked FERC to compel the ISO to complywith the Commission’s Feb. 14 order against relaxing itscreditworthiness standards. Compliance with the order would haltISO purchases since the utilities it then is selling the power to,Pacific Gas & Electric and Southern California Edison, are indefault and don’t meet the credit standards.

Another glimmer of more hope for this summer’s power shortagesin the state came on the heels of a wet weekend statewide and moreon the way. As a result, rainfall totals that had lagged far undernormal are now above normal and the so-called snow pack in theSierra-Nevada mountains is improving for the first time thiswinter. Both are critical to the state’s approximately 13,200-MWhydroelectric power system.

“We’re looking at ending up at about 76% (of normal) for hydro,if things stay as they now are,” said Jon Tremayne, a PG&Eutility spokesperson in San Francisco. “The weekend was certainly apositive gain in terms of water content.” Less than a week ago thecompany’s hydro reserves were about 73% of normal.

In another development, Duke Energy announced Monday that two ofits lawsuits against the state of California and various energyagencies have been suspended “as progress continues toward anegotiated solution.”

The company reached an interim settlement in connection with itslawsuit against Gov. Davis regarding his commandeering of long-termpower contracts on which California utilities had defaulted. Underthe settlement, the California Department of Water Resources (CDWR)will purchase the power from Duke Energy that was previously beingprovided under contracts to Southern California Edison and PacificGas & Electric. The interim settlement is set to expire April30.

“We’re pleased we were able to reach this interim agreement,”said Bill Hall, head of Duke Energy’s California operations. “Itgives California consumers the benefit of the long-term contractprice that was negotiated with the utilities before they defaulted.And it allows Duke Energy to provide the electricity through anentity that can pay us for it. We hope that the interim settlementwill give us enough time to develop a comprehensive long-termsolution that works for everyone.”

On the legislative front in California, the Assembly’s energycost and availability committee looked at seven bills to addressthe state’s electricity woes. Action on the proposed creation of astate power authority is expected later in the week.

On the broader issue of state negotiations over theprivate-sector utilities’ 60% portion of the state transmissiongrid, PG&E negotiators were awaiting more talks perhaps laterin the week when Davis returns from his political trip in East,according to another PG&E spokesperson.

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