-Caveat Lector- ---------- Forwarded message ---------- Date: Wed, 13 Jun 2001 16:43:03 -0000 From: Robert Sterling <[EMAIL PROTECTED]> Reply-To: [EMAIL PROTECTED] To: [EMAIL PROTECTED] Subject: Konformist: Cal Energy Swindle Continues, PT 1 Please send as far and wide as possible. Thanks, Robert Sterling Editor, The Konformist http://www.konformist.com Robalini's Note: In one of the more blatant examples of the dishonest cynicism surrounding the policies of "president" Bush, the Shrub administration has turned down a request by California to waive exemption of the use of ethanol in gas for a more clean burn. This despite the fact that if a shortage of corn crops occurs (not to mention that there may not be enough to meet the huge California market), it could disastrously jack up gasoline prices. This is once again proof of his lie over concern for "lost jobs" in explaining his administration's reactionary energy and environmental policies. The facts speak for themselves: none of his moves surrounding energy policy have benefited any but huge corporations. http://www.latimes.com Monday, June 11, 2001 Gas Additive Rule Won't Be Waived Pollution: EPA official says California will not get exemption. Residents likely to pay at pump. By RICHARD SIMON, DAN MORAIN, Times Staff Writers WASHINGTON--The Bush administration plans to deny California's request for exemption from a federal gas rule that state officials say would increase already-rising prices at the pumps, an Environmental Protection Agency official said Sunday night. The decision, expected this week, would require the state to use a fuel additive, most likely ethanol, to help gasoline burn more cleanly. That could cost California drivers as much as $450 million a year, said Roger Salazar, a spokesman for Gov. Gray Davis. It also could trigger fuel shortages. The decision is likely to increase the friction between Davis and the White House, already at odds over electricity price controls. It also would complicate Davis' efforts to phase out the gas additive MTBE (methyl tertiary butyl ether), which has polluted ground water. The decision, for which the EPA official offered no explanation, comes after heavy lobbying by corn growers and farm state lawmakers who regard California as a huge new market for ethanol and, on the other side, by oil companies and California's congressional delegation, which supported the waiver. The oil companies contend they can make gas that can meet anti-pollution standards without having to use ethanol. "If, in fact, the Bush administration has turned down the request for a waiver, it is again showing a blind eye for California's problems," said Howard Gantman, a spokesman for Sen. Dianne Feinstein (D-Calif.). "The state urgently needs the waiver. MTBE pollutes the ground water, and there is not enough ethanol available without a price increase at the pump." The Clean Air Act requires that gas sold in the nation's smoggiest regions contain an "oxygenate" that makes it burn more cleanly. The requirement applies to 70% of the gas sold in California. Refiners have generally used MTBE, but Davis has ordered it to be phased out by Dec. 31, 2002, because it has contaminated ground water throughout the state. The only practical alternative to MTBE is ethanol. The debate is expected to continue in Congress, where Feinstein is sponsoring a bill that would allow any state to get a waiver from the requirement if the state could demonstrate that it could meet the clean air standards without the additive. Davis, in a conference call with reporters Sunday, said he had no comment until he is formally notified of the decision by the EPA. But Sen. Joseph I. Lieberman (D-Conn.), who joined Davis in the conference call, said he was "concerned about it." Lieberman, who with the Democratic takeover of the Senate became chairman of the Governmental Affairs Committee, is planning hearings later this month on California's energy crisis. President Bush, during a visit to Iowa on Friday, expressed support for ethanol, produced in Midwest states with the help of federal subsidies. "I still strongly believe that ethanol is important, not only to reduce dependency on foreign sources of energy but secondly as a way to clean the air," he said. The decision was hailed by corn growers and ethanol makers, as experts say California's huge gas market would need about 580 million gallons of ethanol a year--or about one-third of U.S. production--to meet federal requirements. The ethanol industry dismisses concerns that requiring use of the product could increase gas costs or that there will not be enough ethanol to meet California's demands. But the California EPA estimates that transportation of ethanol to the state from the Midwest, whether by barge, which is the normal route, or by rail may add 3 to 5 cents a gallon at the pumps. The Bush administration also has repeatedly rejected California's request for price caps on electricity. Davis renewed that call Sunday, saying independent power companies amount to "an energy cartel" that needs to be more closely regulated by the federal government. Saying no issue is more pressing, Lieberman said Sunday he intends to hold hearings into the energy crisis, and Davis plans to testify later this month. Lieberman said he intends to call all five members of the Federal Energy Regulatory Commission to testify June 20, the same day Davis is scheduled to appear. "It just seemed to me that nothing was more pressing than the availability and pricing of energy," Lieberman said, explaining why he chose to focus on the crisis. ***** Thursday June 7 7:48 PM ET Cooler Weather Taming Power Prices By JENNIFER COLEMAN, Associated Press Writer SACRAMENTO (AP) - California's power buyers have locked in enough power in long-term contracts to help bring wholesale electricity prices down to near-normal levels, state officials said Thursday. Helping cut prices are better-than-expected conservation efforts by Californians, more power plants returning to service and more scrutiny of electricity generators by several investigators. All have converged to cut spot-market power prices to below $95 per megawatt hour and as low as $20 during the off-peak times. The state paid an average of $284 per megawatt hour during the first quarter of the year, and Duke Energy said last week it charged as much as $3,880 per megawatt hour in January. While things have started looking better, no one is predicting this means an end to the state's power crisis. However, there are bright spots. As state power buyers sign contracts for more power through long-term contracts, it lessens the state's exposure to the ultrahigh prices for last-minute power purchases, said Ray Hart, deputy director of the Department of Water Resources. Contracts the state locked in this spring, when spot prices reached historical highs, will be honored even if the price on the open market continues to drop, Hart said. But state could walk away from contracts that haven't been finalized if the price is too high. This is the first time that the state has been able to turn down electricity since January, when it began purchasing power for the customers of three financially shaky utilities - Pacific Gas and Electric Co. (news - web sites), San Diego Gas and Electric Co. and Southern California Edison (news - web sites). Still, said Richard Wheatley, spokesman for Reliant Energy, ``it's way too early to predict a trend and say that California has turned a corner. There's just not enough power available and if some of the factors bringing prices down go away, Californians could find themselves in a situation where they have no lights on at all.'' Harder to quantify, too, is ``the increased scrutiny of generators'' as investigations by state and federal authorities turn up the heat on power producers, said Nancy McFadden, an adviser to Gov. Gray Davis (news - web sites). ``We think that has had some impact as well,'' she said. Power plant operators could have lowered prices in the face of a proposed windfall profits tax, growing support for seizing generating facilities and the creation of a state public power authority, said Harvey Rosenfield, executive director of the Foundation for Consumer and Taxpayer Rights. ``They may have stolen all they could and moved on to another region of the country. They absconded with the profits,'' he said. ``They may have wanted to lower prices so their buddies in Washington, D.C., would say 'Look California doesn't need price caps.''' The state still needs the temporary price caps that Davis has asked the Federal Energy Regulatory Commission (news - web sites) to implement, McFadden said. The recent lull in the crisis is ``good news, but our battle's not over,'' she said. ``That's why we still need FERC to do its job.'' ***** World Socialist Web Site www.wsws.org ---------------------------------------------------------------------- ---------- WSWS : News & Analysis : North America More evidence of price-gouging in California energy market By Andrea Cappannari 9 June 2001 Over the past several weeks, additional evidence has surfaced regarding price-gouging by energy suppliers that sell electricity to utility companies in California as part of the state's deregulation scheme. More than $4 billion has already been drained from the state treasury to subsidize energy purchases. Unless the situation changes by the end of this year, experts predict the state will spend approximately $50 billion to cover soaring energy costs. Earlier this month it was disclosed that Duke Energy Corporation charged $3,880 per megawatt-hour of power over an eight-day stretch from late January into early February. This price is more than double the highest previously reported price of $1,900 per megawatt-hour charged by Reliant Energy earlier this year. According to Duke, the company is charging a credit premium because state utilities had previously failed to pay their bills. Duke maintains that if they are paid for the power, which amounts to $19.4 million for 5,000 megawatts, they will reduce the price by 80 percent. This would bring the bill down to $776 per megawatt-hour, or a total of $3.8 million. This price would still be double the average cost for the same month. According to the Los Angeles Times, if Duke's "premium" charge were passed on to consumers, the average household consuming 500 kilowatt-hours per month would see their monthly electrical bill rise to $1,940. While California Governor Gray Davis publicly attacked Reliant Energy earlier—calling the company's practices "obstructionist"—the governor has said nothing regarding Duke. Earlier in the year Davis held closed door discussions with Duke Energy representatives who offered the governor political support if he toned down his criticisms of Duke and the deregulated energy market. The revelations about Duke's price-gouging come on the heels of a May 25 filing by the California Independent Systems Operator (Cal-ISO), the institution that oversees the flow of power along the state's transmission grid, with the Federal Energy Regulatory Commission (FERC). Cal-ISO is demanding a $5.5 billion refund to the state. Energy suppliers have used two principal methods to drive up wholesale prices in California, where power is sold by bidding on a spot-market. The first is called "economic withholding." Energy corporations enter bids that are substantially higher than the actual cost of the power, with the intention of raising the market clearing price. The second method is "physical withholding," which refers to the intentional restriction of the energy supply placed on the market, in order to increase the price of the remaining supplies of energy under the company's control. Cal-ISO's May 25 filing cites reports by researchers who analyzed market conditions over the last year: "Dr. Eric Hildebrandt found that 30 percent of the wholesale energy prices over the last year can be attributed to the exercise of market power and determined that, on an annualized basis, wholesale prices since January 2000 exceed the cost necessary for new investment by approximately 400 percent and would allow recovery of an investment in new supply in a period of just over one year. Dr. Sheffrin found withholding, especially economic withholding, plagued the market for most hours from May to November 2000. Of the 25,000 hourly bidding profiles studied, fewer than 2 percent displayed no clear pattern of withholding. The study provides direct evidence that many large suppliers actively have engaged in strategic bidding efforts, consistent with oligopoly pricing behavior, with a direct and substantial impact on market prices." The energy suppliers have reaped vast profits from the deregulation of the energy market. In 2000, Reliant Energy's adjusted earnings rose 164 percent to $838 million. The company more than doubled its 2001 first-quarter profits over last year, earning $274 million. Close behind was AES Corporation, which saw net income in 2000 jump 189 percent to $658 million. Dynegy, which earned $452 million in 2000, increased profits by 210 percent over the previous year. The Williams Corp. reported $873 million in income for 2000, and more than a 200 percent rise in first-quarter earnings. In a press release, the company boasts to current and prospective big investors: "The increase primarily was due to substantially higher profits from the energy market and trading business, reflecting successful proprietary natural gas and electric power trading during a year of nationwide volatility across these energy portfolios." In addition to the Cal-ISO filings with the FERC, an administrative law judge with the commission heard testimony at the end of May by the California Public Utilities Commission (PUC) and Southern California Edison, one of the state's major utility companies, charging energy suppliers with price-gouging. The suit charges that the El Paso energy merchant group purchased pipeline capacity from El Paso Natural Gas and then withheld the fuel in order to restrict supply and drive up prices. Once prices had risen significantly, the natural gas was set flowing again. The head of El Paso Corporation, the parent company, admitted he approved the collusion between the two branches. In the face of rising public anger against the energy conglomerates, the Davis administration, with the support of several Democratic state legislators and the City of Oakland, filed a largely ceremonial lawsuit against FERC for failing to ensure that wholesale energy prices are "just and reasonable." A federal judge threw it out. The governor's base of support has been eroded by the continued threat of rolling blackouts this summer, his endorsement of steep rate hikes on consumers and his general prostration before the demands of the energy giants. A recent Field Poll found an 18 percent drop in Davis's approval rating since January, leaving the governor with well under half of the state population's support. Davis has said he was considering suing FERC for a third time, despite the previous failures. He has also demanded that municipal utilities in Los Angeles and elsewhere—which were not deregulated under the state's 1998 plan and retained control of their generating facilities—sell all their surplus power to the state this summer at prices well below the market rate. The utilities rejected Davis's demand, confident that suggestions he might exercise his power to seize plants are a bluff. While Davis is desperately searching for ways to appear pro-active, he is hemmed in on all sides by the Democrats' support for deregulation and his political ties to the energy industry. At the same time, as the governor's recent meeting with President Bush underscores, the Republican administration in Washington opposes even the slightest restrictions on the profits of the energy monopolies, such as temporary price caps. A recent article in the New York Times disclosed the fact that Kenneth Lay, head of the energy corporation Enron, offered political support to Curtis Hebert, then chairman of the FERC, in exchange for support for deregulation policies that would provide windfall profits to Enron. In particular, Enron, which poured large sums of money into Bush's presidential campaign, is keen to get the federal government to push for opening up energy transmission lines owned by private utility companies—currently under the jurisdiction of state governments—to outside private control. ---------------------------------------------------------------------- ---------- Copyright 1998-2001 World Socialist Web Site All rights reserved ***** Gouging charges expanded by ISO REFUND: Operator wants excess profit returned Bernadette Tansey, Chronicle Staff Writer Saturday, June 9, 2001 California's power grid managers filed sweeping claims of market manipulation yesterday against four major energy firms, demanding that federal regulators revoke their right to sell electricity at market rates in California. The California Independent System Operator, which had already called on federal regulators to punish Williams Energy and AES Inc. for what it called price gouging, expanded the complaints to include their fellow industry heavyweights -- Duke Energy, Dynegy Inc., Reliant Energy and Mirant Corp. The half-dozen companies accused by the ISO control one-third to one- half of California's electricity market. The ISO asked federal regulators to order the companies to refund excess profits reaped as far back as May 2000. The six companies bear responsibility for part of the $6.7 billion that the ISO estimates California was overcharged, the agency says. But it did not specify how much each company should pay. Taken together, the filings against the six companies amount to a demand that the Federal Energy Regulatory Commission either cancel the deregulation of wholesale electricity markets in California or come up with better rules to curb what the ISO called "egregious" monopoly control over the state's power resources. POWER FIRMS YAWN Representatives of the power companies said that the complaints contained nothing new and that the firms didn't manipulate the market. Although electricity prices have come down in recent weeks, the ISO said little prevents the major power suppliers from jacking up rates again. Rules put into place by federal regulators last month limiting prices during power emergencies are weak deterrents, the ISO said. Grid managers said those limits can be evaded by strategies such as megawatt laundering -- sending the power to out-of-state buyers or marketers, who then sell it back to California at the last minute in transactions that are immune from the federal caps. The ISO says the companies -- which bought the power plants that utilities had to sell under the state's deregulation -- should now sell that power under the kind of traditional regulatory scheme that governs Pacific Gas and Electric Co., Southern California Edison and San Diego Gas & Electric. But the rates, based on the actual cost of operation plus a modest profit, would be set by energy regulators rather than the state Public Utilities Commission. "We're not talking about permanent reregulation," said Charles Robinson, general counsel for the ISO. Unlike, say, the local supermarket, power generators do not have the right to sell at whatever price they please. They must get permission from the federal government every three years to sell at market rates, and winning that right depends on proof that they are not unduly controlling the market. "They've not demonstrated so far they can participate in the market without playing games," Robinson said. RENEWALS DUE SOON Most major generators are up for renewal soon. The state has asked the regulatory commission for a ruling on Williams and AES by June 15, and on the other energy firms by June 28. If federal regulators reject the state's request, the ISO could take the claim to a federal appeals court. Regulatory commission spokeswoman Celeste Miller declined to comment on the state's filings. In response to an earlier state demand that energy regulators order refunds of more than $6.7 billion, the regulatory commission told power firms to justify about $124 million in electricity charges. Dynegy spokesman John Sousa said the ISO has filed no new evidence of market manipulation, and is simply rehashing its dissatisfaction with the new regulatory commission controls. Duke spokesman Tom Williams said the forces of supply and demand are already taming California's energy crisis. He said an increase in long-term contracts, conservation, increased hydroelectric power production and plants coming back online after repairs are all pushing prices down. But all that could change as the summer heats up, said Ray Hart, deputy director of the state Department of Water Resources, which buys electricity for state utilities. Hart said the limited federal price controls worked when they first kicked in as California declared a power emergency last week and generators made more electricity available. E-mail Bernadette Tansey at [EMAIL PROTECTED] ©2001 San Francisco Chronicle Page A - 1 Chronicle If you are interested in a free subscription to The Konformist Newswire, please visit: http://www.eGroups.com/list/konformist Or, e-mail [EMAIL PROTECTED] with the subject: "I NEED 2 KONFORM!!!" (Okay, you can use something else, but it's a kool catch phrase.) 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