CHRONOLOGY - Key developments in the California power crisis

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Sunday January 7, 6:40 pm Eastern Time

CHRONOLOGY-Key developments in California power crisis

WASHINGTON, Jan 7 (Reuters) - The following summarizes key recent events in California's power crisis, which has it origins in a landmark 1996 law that deregulated the state's electricity markets.

The law prohibits utilities from passing through all increases in wholesale power costs until spring 2002, and bars them from negotiating long-term supply contracts.

Summer 2000 - California declares 31 electricity emergencies as booming economy and summer air conditioning demand pushes power grid to brink of collapse. Some consumers see monthly bills nearly triple when Sempra Energy (NYSE:SRE - news) unit San Diego Gas & Electric is allowed to pass through costs. State lawmakers cap rates to buffer consumers.

Nov. 1, 2000 - Federal Energy Regulatory Commission issues draft plan to fix state wholesale electricity market that includes creating independent boards of directors for the state auction house for spot market power purchases. FERC also proposes to cap California Power Exchange spot prices at $150 per megawatt hour with limited exceptions.

Nov. 8 - PG&E Corp. (NYSE:PCG - news) unit Pacific Gas and Electric goes to federal court contending it has the right to recover its wholesale power costs through retail rates.

Nov. 13 - State lawmakers express concern on FERC draft plan and warn they may re-regulate market if state's 33 million residents are not protected from market manipulation.

Nov. 14 - State declares rare autumn power emergency after 12,000 megawatts of power are taken off market due to generating station repairs and lack of hydropower from Pacific Northwest. The declaration is first in a series of power emergencies.

Nov. 17 - Edison International's (NYSE:EIX - news) Southern California Edison (SoCal Edison) asks state regulators to permit 9.9 percent January rate rise as part of five-year plan in attempt to recoup billions of dollars of uncollected costs.

Nov. 22 - PG&E asks state regulators to permit 16.5 percent January rate increase as part of a five-year plan.

Nov. 22 - U.S. Energy Secretary Bill Richardson criticizes FERC draft plan, saying California markets are ``dysfunctional'' and jeopardize reliability of the electricity grid.

Nov. 28 - Activist group Foundation for Taxpayer and Consumer Rights launches drive to put the future of California deregulation on state ballot in 2002.

Nov. 29 - Consumers file $1 billion class action lawsuit accusing 14 energy companies of manipulating prices.

Dec. 4 - California utilities ask consumers to refrain from turning on Christmas lights until after 8 p.m. to save power.

Dec. 6 - U.S. government warns soaring natural gas costs mean record-high winter heating bills for American consumers.

Dec. 7 - San Diego Gas & Electric asks FERC to impose price caps on natural gas entering state after prices top $50 per million British thermal units (Btu) compared to $3 per million Btu one year earlier.

Dec. 7 - California Independent System Operator, which controls supplies in the state, issues first-ever Stage 3 emergency warning. State narrowly averts rolling blackouts.

Dec. 8 - Georgia-Pacific Corp closes paper mill in Bellingham, Wash. and lays off 800 workers due to soaring monthly power costs.

Dec. 8 - Federal government orders offices across West to turn off appliances to save power. Federal Bonneville Power Administration takes unusual step of paying large industrial plants in the West to curb electricity use.

Dec. 13 - Clinton administration takes rare action of invoking emergency powers to prevent black-outs in California after a dozen power generators refuse to sell electricity to state utilities due to concerns about credit-worthiness. Order forces power generators and marketers across West to resume sales to state. California power costs for one day seen near $800 million, same as entire month of December 1999.

Dec. 15 - FERC orders California utilities to begin negotiating long-term contracts of up to 20 years instead of relying on volatile spot market; rejects regional wholesale price cap sought by utilities.

Dec. 18 - SoCal Edison tells FERC it may be forced to declare bankruptcy without federal action.

Dec. 19 - Pacific Gas and Electric says $4.5 billion in unrecovered power costs puts quarterly dividend at risk.

Dec. 20 - Standard & Poor's rating agency says Pacific Gas and Electric and SoCal Edison nearly out of cash and at grave risk of imminent default on bonds.

Dec. 27 - U.S. natural gas futures hit record high $10.10 per million Btu, about four times above year-ago prices.

Jan. 4 - California Public Utility Commission orders independent audits of PG&E and SoCal Edison and approves an average 10 percent increase in retail rates. But Shares of firms plunge about 40 percent as Wall Street dismisses the action as too little, too late.

Jan. 5 - Moody's Investors Service and Standard & Poor's rating agency downgrade PG&E and SoCal Edison credit ratings to one level above junk bond ratings. Fitch cuts even lower.

Jan. 5 - California state treasurer proposes $10 billion bond issue to help both utilities build generating capacity and transmission lines. Ratings downgrades effectively shuts firms out of debt markets, forcing them to borrow from banks.

Jan. 5 - White House steps in and schedules meeting on Jan. 9 with Treasury Secretary Lawrence Summers, Energy Secretary Bill Richardson, utility executives and other regulators to discuss ways to end the crisis.

-- (in@energy.news), January 07, 2001

Answers

Complicating efforts to solve the problem is that many California residents don't believe there is an actual shortage.

http://dailynews.yahoo.com/h/ap/20010107/us/power_woes_poll_1.html

Sunday January 7 4:01 PM ET

Californians Don't See Power Problem

LOS ANGELES (AP) - As state officials weigh drastic proposals to deal with what they see as a deepening electricity crisis, a majority of Californians say there is no power problem.

According to a Los Angeles Times Poll published Sunday, 54 percent did not believe there was an actual shortage of electricity in California, while 36 percent said there is a shortage.

-- (in@energy.news), January 07, 2001.


we're screwed...time to buy EIX at bargin prices...

-- Uncle Bob (unclb0b@aol.com), January 07, 2001.

There is no increase in demand significant enough to cause a shortage of energy. There is no "crisis" other than the fact that corporations are getting greedier every year. Corporate executives don't like it if they don't get at least a $5 million bonus at the end of the year, so they are sticking it to the consumers. Deregulation was a bad decision, but these companies are not going to become more competitive, they will just charge us more or file bankruptcy and get help from the government. Either way, the taxpayers pay.

*******

Poll: There's really no power problem in California

January 7, 2001 Web posted at: 9:17 p.m. EST (0217 GMT)

LOS ANGELES, California (AP) -- As state officials weigh drastic proposals to deal with what they see as a deepening electricity crisis, a majority of Californians say there is no power problem.

According to a Los Angeles Times Poll published Sunday, 54 percent did not believe there was an actual shortage of electricity in California, while 36 percent said there is a shortage.

Officials are considering alternatives ranging from a public takeover of the entire power network to a crash construction program for new power plants. The state's two largest utilities are already $9 billion in debt and are losing an estimated $40 million each day because wholesale prices are soaring while a state-imposed rate freeze prevents them from passing the costs on to customers.

Customers of municipally owned utilities in Los Angeles, Pasadena, Riverside, Sacramento and other cities have not been affected by the 1996 deregulation or soaring electricity prices.

The Times Poll interviewed 575 Californians on Thursday and Friday, with a margin of sampling error of plus or minus 4 percentage points. It found 66 percent view deregulation as a mistake, a sharp rise from 47 percent in an October poll.

"How can we go so many years with no problems at all, then suddenly we run into an energy crisis?" asked Carl Fisher, 79, a retired postal worker.

"We just ended up with a raw deal," said respondent Stephanie Farley, 42, of National City, outside San Diego.

Farley's recent monthly gas and electric bill was $604 for a three-bedroom home, and she has paid up to $800. Her utility company, San Diego Gas & Electric, is no longer subject to the rate freeze and last summer increased its rates as its wholesale costs rose.

Asked about Gov. Gray Davis' handling of the electricity crisis, Californians said they disapprove, by 39 percent to 29 percent. Only 33 percent said the governor has shown decisive leadership on the issue, while 41 percent said he has been indecisive.

Davis is expected to discuss his proposals in his State of the State speech Monday, but administration officials say he will likely focus on conservation and financial incentives for power plant builders rather than price controls, re-regulation or public ownership of the grid.

State legislators have proposed spending $5 billion of the state's surplus on rebates to consumers, spending $3 billion to buy hydroelectric power plants and operating them under contract with the utilities, and creating a state agency to build and run power plants.

http://www.cnn.com/2001/US/01/07/power.woes.poll.ap/index.html

-- (not a power crisis @ greed. crisis), January 07, 2001.


White House Calls Summit On California Power Crisis

http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=004M85

-- related item (in@the.news), January 08, 2001.


"Deregulation was a bad decision, but these companies are not going to become more competitive, they will just charge us more or file bankruptcy and get help from the government. Either way, the taxpayers pay."

Agreed, so let's not let the clintonites step in and screw the taxpayers at the last minute with some behind-the-scenes stepping-out- of-office fed bailout. Let them fail, and let the greedy banks and power suppliers lose their payments. heh heh heh. That should teach a lesson to all on both sides.

-- mbo (rfp@mail.com), January 08, 2001.



Until a new power plant or plants are built in California, electricity is going to be tight. One way electric use might be reduced is the higher prices caused by the shortage, and the other is rolling blackouts. Neither option is good for California's economy.

A recession may turn out to be what temporarily eases California's power problem.

-- (sad@to.say), January 08, 2001.


"According to a Los Angeles Times Poll published Sunday, 54 percent did not believe there was an actual shortage of electricity in California, while 36 percent said there is a shortage. "=============

THUD! And here I was lamenting the fact that California was run by a bunch of morons. Never in my wildest dreams did I realize just how deep the problems of morons ran!!! The whole damn state is filled with screamin' idiots!!!!!!! Good grief! Get your heads outta your collective asses!! The pathetic thing is these people have their heads so far up their asses that this problem will fester and grow until the rest of the west is forced to come to their rescue, forcing ALL the west to pay outrageous energy bills.

-- Forget California (Rest_of_West@is.the.best), January 08, 2001.


bardou, you are the dumbest human being on the face of the earth. You're hoping for teotwawki because you invested in so much toilet paper. I hope you hold your breath because it will never happen, and YOU will just have to sit there in California suffering the rest of your miserable little life away. I love watching you wring your hands, and I wish I was there in person to watch you turn blue.



-- Having fun watching (bardou@make a fool.out of herself), January 08, 2001.


http://www.sfgate.com/cgi- bin/article.cgi?file=/chronicle/archive/2001/01/07/MN122396.DTL Power Shortage Not Addressed
CRISIS: Blackouts expected during the summer


-- I (am@not.Bardou), January 08, 2001.

Hello everyone. Obviously, I have been watching the CA situation closely...unfortunately, the latest step in this chronology is that a bunch of folks at SCE are already or will soon be without a job (1,500 layoffs according to the latest information). In my opinion, bankruptcy is going to sting both SCE and PGE, because consumers will not tolerate huge price increases, and the power companies can't deliver energy at a loss for much longer.

And we haven't even hit summer yet :(.

-- Dan the Power Man (dgman19938@aol.com), January 08, 2001.



Hey Dan, good to see you here again. What's your take on ENRON, if any?

-- Just curious (doing@little.research), January 08, 2001.

"And we haven't even hit summer yet :(."

I have friends in California. They say the month of December was gorgeous, over 70 almost every day. Last summer was no hotter than normal. Why are you and these power companies claiming that the weather is the problem when most Californians are using less power than normal?

-- (that's@bull.shit), January 08, 2001.


Just curious: Hello. All I've seen about Enron is that they have been quite aggressive in their attempts to get into the electricity generation/trading business, and seem to be doing well, with offices in several major cities.

That's Bull: All I'm saying is that the California crisis will be made worse by hot summer temperatures. I'm not "blaming" the weather; keep in mind that up until recently, weather almost always is the root cause of major outages. If we have a real hot summer in the Southwest, California won't be the only place with energy shortages.

-- Dan the Power Man (dgman19938@aol.com), January 09, 2001.


This is the biggest part of the story the media conveniently omits:

" But free markets and deregulation have nothing to do with the California energy scheme. As Michael Lynch of Reason Magazine explained recently: "Despite numerous claims to the contrary, the California electricity market wasn't deregulated. It was restructured by state politicians." In 1996, the California State Legislature entered into a grand scheme with big energy users, the private utilities, environmental and consumer groups.

The utilities had to sell off their power plants but got to write off the costs of bad prior investments. They were also given a provision of the law called "competitive transition charges," which had the effect of increasing their profits, while tending to keep out new competitors. At the heart of the scheme was the law that retail prices were fixed by the government, but wholesale prices would be subject to the market. This isn't a free market, its a governmentally rigged market. And, as always happens when regulators try to out think the marketplace, the inexorable forces of supply and demand defeat the most complexly constructed schemes."

http:/ /www.washtimes.com/op-ed/ed-column-20011102066.htm

-- Cave Man (caves@are.us), January 10, 2001.


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