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Power Crunch Spreading Rapidly/bush: NY, New England Next For Outages
Can you say, "we told you so?"
Get out those candles and hurricane lamps, boys and gals.
- - - - - - - - - - - -
New York Is Next For
Blackouts, Warns Bush
By Simon Davis in Los Angeles
and Ben Fenton in Washington
http://www.telegraph.co.uk
3-21-1
New York could be the next American city to experience electricity cuts,
the White House said yesterday, as the power crisis spreads outwards
from California.
Boston and other cities in New England may be affected, but local power
managers said they believed they could keep the lights burning through
the summer unless particularly hot weather forced customers to turn up
their air conditioners.
As blackouts in California were announced last night for the second day
in succession, President Bush gave warning of critical shortages of gas,
petrol and electricity this summer. On Monday, cars crashed when traffic
lights failed, office workers were trapped in stalled lifts and
thousands of homes were plunged into darkness as California suffered a
string of blackouts.
Unlike the power cuts eight weeks ago that affected a relatively small
section of northern California, this week's blackouts hit communities in
the more populous areas, from Silicon Valley to Beverly Hills and Santa
Monica. San Diego and the state capital, Sacramento, were also affected.
The California energy crisis led Mr Bush and Spencer Abraham, his Energy
Secretary, to say they believed blackouts would spread. Mr Bush said:
"One thing is for certain: there are no short-term fixes. The solution
for our energy shortage requires long-term thinking and a plan that
we'll implement that will take time to bring to fruition."
Mr Abraham told leaders of small businesses that America was facing its
worst energy crisis since the Seventies and predicted that, unless
radical restructuring was brought in rapidly, the whole economy could
falter as it did then.
*****
Los Angeles Times
Friday, March 23, 2001
Estimate of Possible Overcharges for Electricity Rises to $6.3 Billion
Energy: Grid operator says it has not assessed how much should be refunded.
Producers deny that they have profiteered.
By NANCY RIVERA BROOKS, TIM REITERMAN, Times Staff Writers
California's power grid operator boosted its estimate of potential
overcharges by major electricity suppliers from $5.5 billion to nearly $6.3
billion Thursday. But lawyers and industry observers said prospects for a
massive refund are highly uncertain.
The California Independent System Operator said it has not yet
determined how much of a refund it would seek for utilities and taxpayers.
Cal-ISO analyzed confidential bidding data on tens of thousands of
electricity sales to document what it alleges was market manipulation by
generators to drive up prices.
But to more precisely measure the amount of alleged overcharges,
officials said, they need the kind of confidential power plant cost data that
generators provide to federal regulators.
Electricity producers denied that they have profiteered in the
California electricity market and argued that Cal-ISO's figures do not take
into account all their costs.
Cal-ISO presented the cost data Thursday to the Federal Energy
Regulatory Commission as part of its formal response to a commission staff
proposal to curb electricity market manipulation in California. Cal-ISO is
using the $6.27-billion total to argue that the commission, which is charged
with ensuring just and reasonable electricity rates, needs to be more
aggressive in helping the state cure its power ills.
"While FERC is headed in the right direction, we don't believe it has
gone far enough," Cal-ISO General Counsel Charles Robinson told a news
conference.
The agency said wholesale electricity costs in California could total
$70 billion this year based on prices paid during January and February. Such
costs totaled $27 billion in 2000 and $7.43 billion in 1999.
The Times reported Thursday that a study by Cal-ISO found evidence of
market manipulation and consistent patterns of bidding far above costs in the
state's deregulated market. The agency found that suppliers commonly offered
electricity at twice their costs.
The study covered five major in-state power suppliers--Reliant Energy,
Dynegy, Williams/AES, Duke Energy and Mirant, formerly Southern Energy--plus
16 power importers.
Grid officials avoided calling the electricity tab an "overcharge,"
preferring instead to term the prices from May through last month "beyond
what we would think would be reasonable in a competitive market."
When asked if Californians had been cheated by electricity generators to
the tune of $6.27 billion, Robinson replied: "I think it's way too early to
draw that conclusion."
Cal-ISO also is exploring legal theories that would let FERC order
refunds for questionable electricity trades that occurred before Oct. 2, the
cutoff the commission established for consideration of refunds.
Agency officials said they are talking with the state attorney general's
office, Public Utilities Commission and Electricity Oversight Board to
determine how best to seek refunds.
"The major option would be to go to FERC, but there are other options,"
Robinson said, adding that the agency will settle on a strategy within 30
days.
The bulk of any potential refund is expected to go to utilities, with a
smaller amount to the state for purchases by the Department of Water
Resources since January. The state became the major power purchaser for 27
million Californians as skyrocketing prices put Pacific Gas & Electric Co.
and Southern California Edison nearly $14 billion into debt and many
suppliers refused to sell them electricity.
"We are pleased that FERC has looked into the prices being charged in
the wholesale market and urge them to quickly review the latest findings by
the ISO," said PG&E spokesman Ron Low.
Gary Stern, Edison's director of market monitoring and analysis, noted
that the Cal-ISO study documented two practices that pushed up prices:
shutting down power plants and bidding electricity into the market at prices
so high they were not accepted.
"If these guys have such high costs . . . how come they're making so
much money?" Stern asked.
Industry representative Jan Smutny-Jones called Cal-ISO's accusations an
attempt "to poison the atmosphere against the generators and use them as
scapegoats."
"Generators have been playing by the rules and have been offering to
sell power at substantially lower, long-term contract rates since last
summer," said Smutny-Jones, executive director of the Independent Energy
Producers, a Sacramento-based trade group.
When asked about the Cal-ISO study at hearings of the House Subcommittee
on Energy and Air Quality on Thursday, Duke Energy Vice President William
Hall denied any wrongdoing.
"We do not conduct ourselves in that manner," he said. "We don't
withhold generation from the marketplace."
Consumer advocates said the $6.27 billion in alleged overcharges
bolsters their case that ratepayers should not be held liable for the
problems of deregulation.
"This should be a watershed day in the political battle about who bears
the brunt of deregulation," said Doug Heller of the Foundation for Taxpayer
and Consumer Rights in Santa Monica.
In recent weeks, FERC has ordered suppliers to justify the prices they
charged in January and February or pay about $124 million in refunds to the
utilities and the state. Cal-ISO had asked for refunds of $550 million for
December and January.
But lawyers and industry observers say a massive refund may be difficult
to push through an agency not known for being aggressive.
FERC officials already have said they believe that any overcharges
before Oct. 2 fall beyond their oversight authority. The refund period was
pegged to an investigation into nationwide electricity prices that began a
month earlier.
"Getting refunds is complicated, particularly since you are talking
about a market rate," said Marty Kanner, a Washington lawyer who represents
municipal utility companies. "The way the law is structured, the rate is
assumed to be fair unless someone has filed a complaint, and if it was
considered fair, you can't force a company to repay it later."
* * *
Reiterman reported from San Francisco, Rivera Brooks from Los Angeles.
Times staff writers Megan Garvey and Jennifer Dorroh in Washington
contributed to this story.
*****
Tuesday March 27 3:52 PM ET
Calif. Regulators OK Rate Increases
Audio/Video
Energy Regulators Propose New Rate Hike in California - (KBWB, San
Francisco)
By KAREN GAUDETTE, Associated Press Writer
SAN FRANCISCO (AP) - The California Public Utilities Commission (news - web
sites) unanimously approved electricity rate increases of up to 46 percent
Tuesday to try to head off blackouts this summer and keep the state's two
biggest utilities from going under.
The increases are the largest in California history.
Amid the jeers of protesters yelling ``Hell, no, we won't pay!'' the PUC
voted 5-0 for the increases, which take effect immediately for the 25 million
Californians served by Pacific Gas and Electric Co. (news - web sites) and
Southern California Edison (news - web sites) Co.
``The PUC has done all it can,'' commission President Loretta Lynch said.
``We have fought back hard in every venue possible against these unjust
energy prices.''
Lynch had proposed the increases as a way to get ``electricity hogs'' to
conserve on power and stave off blackouts this summer, and as a way to keep
SoCal Edison and PG&E solvent.
SoCal Edison and PG&E say they have lost more than $13 billion since last
summer because of high wholesale electricity prices and because California's
1996 deregulation law prevents the utilities from passing those costs on to
their customers.
Some ratepayers and consumer groups have branded the plan a rip-off.
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