Home Page Stories Sunday, February 25, 2001

As crisis expands, list of players in power game expands

MAX JARMAN, THE ARIZONA REPUBLIC

As the energy crisis in the West grows, so does the cast of players.

Before the advent of deregulation in the mid-1990s, the West's electrical power arena included a handful of large investor-owned utilities, such as Southern California Edison and Arizona Public Service and the state commissions that regulated them.

Add to that an assortment of municipal power companies, rural cooperatives and public power marketers such as the Bonneville Power Administration that sells power from government-owned dams along the Columbia River and the Western Power Association that sells electricity generated by dams along the Colorado River.

The co-ops and municipal power companies are regulated by various city councils, state legislatures and public utility commissions. The public power agencies are under the oversight of the U.S. Department of Energy and its adjunct, the Federal Energy Regulatory Commission.

Since deregulation, a host of new players has entered the fray.

They include unregulated independent power producers, such as Dynegy, NRG Energy, Reliant Energy and Duke Energy and power marketers such as Enron and Pinnacle West Power Marketing, all of which act as intermediaries buying power from producers and selling it to distributors. Many of the new generating companies cut their teeth on the deregulation of natural gas and continue as major suppliers of that commodity.

And with the crisis deepening, politicians have been increasingly visible, particularly Western governors whose association is now delivering organized clout to what had been largely individual efforts. Other groups, including power producers and large power users are said to also be forming groups to leverage their muscle.

A quick guide to some of the major players in electricity deregulation and the power crisis in the West:

-State Sen. Steve Peace (California): The state senator led California's effort to deregulate electricity and proposed the state take control of its power plants after his plan spun out of control. His political career is thought to be mortally wounded.

-Western Governors' Association: Fractionalized group of 21 governors of Western states, Guam and American Samoa who agree on the need for energy conservation and more power plants, but disagree on whether temporary wholesale price caps should be put in place to protect consumers.

-Gov. Gray Davis (California): Currently leading California's efforts to solve its energy problems. He orchestrated the $10 billion bailout of the state's power system and advocates price caps. His political future could hinge on finding a long-term solution to the problem.

-Gov. Jane Dee Hull (Arizona): Vice chairman of the Western Governors' Association and an increasingly visible foe of price caps.

-Gov. John Kitzhaber (Oregon): A vigorous proponent of price caps who is battling to keep Oregon's consumers from being affected by California's woes.

-Gov. Gary Locke (Washington): A proponent of price caps, 60 percent of his state uses public hydro power, which is jeopardized by a lingering drought and low reservoir levels.

-Spencer Abraham: Recently appointed head of the Department of Energy is President Bush's point man on Western energy. The former Michigan senator favors streamlining the power plant approval process and creating a national energy policy, but opposes price caps.

-Curt Hebert Jr.: As chairman of the Federal Energy Regulatory Commission he oversees the Western power grid and wholesale electricity market. He has ordered power producers to continue to sell to California despite a possibility they might not get paid, but has resisted pleas for wholesale price caps.

-Bonneville Power Administration: The marketing organization for 18 government hydro plants along the Columbia River is the West's largest provider of electricity. The agency is losing generation due to low reservoir levels and has had to increasingly buy power on the spot market. It plans to raise rates to cover the costs.

-Western Area Power Administration: Bonneville's counterpart in the Southwest sells power from Colorado River dams. It is not experiencing the same supply constraints.

-Pacific Gas & Electric (PG&E): Public utility serving about 4.6 million customers in Northern California. The company has racked up billions of dollars in debts because it was forced to pay skyrocketing spot prices for wholesale electricity and sell it to consumers for a fraction of the price. The utility has said it may have to file for Chapter 11 bankruptcy protection. Its nonregulated affiliate is proposing to build a plant in Arizona.

-Southern California Edison: A public utility serving about 4 million customers in Southern California that is in the same shape as PG&E and also has talked about Chapter 11. Both companies still own nuclear and hydroelectric generating stations that could fall into the hands of independent power producers that are the companies' major creditors.

-Dynegy Inc.: Houston energy firm that, with NRG Energy, bought four power plants from California utilities and reaped huge profits as energy prices soared. Dynegy has teamed with NRG to also purchase several Nevada power plants owned by Sierra Pacific Resources and is proposing to build a plant in Arizona.

-Reliant Energy Inc.: Another Houston-based energy company that bought five California power plants from Southern California Edison and also has reaped profits as prices have increased. Reliant has proposed building plants in Arizona and Nevada.

-NRG Energy Inc.: Minneapolis-based energy firm that, with Dynegy, has purchased power plants in California and is proposing to buy several plants in Nevada.

-Duke Energy: Based in Charlotte, N.C., Duke bought three power plants in California and is proposing to build plants in California and Arizona.

-AES Corp.: International energy provider, based in Arlington, Va., that purchased three California power plants and is proposing to build a plant in Arizona.

-PP&L Global: Affiliate of Allentown, Pa.-based Pennsylvania Power & Light bought Montana Power's generating facilities in Montana and is a partner with Duke energy in a new power plant project in Arizona.

-San Diego Gas & Electric: San Diego utility that brought the state's deregulation problems to the forefront last summer when it began passing along wholesale rate increases to consumers. Its affiliate, Sempra Energy Resources is proposing to build plants in Arizona and California.

-PacifiCorp: Portland-based subsidiary of UK's Scottish Power Group provides electricity to Oregon, Wyoming, Utah and parts of Washington and Idaho. Has a seasonal power exchange with Arizona Public Service in Phoenix. PacifiCorp has proposed a 21 percent rate increase.

-Pinnacle West Capital Corp.: Phoenix-based parent of Arizona Public Service has developed a sophisticated power trading arm and is building additional generation in Arizona. It has offered to buy Southern California Edison's share of the Palo Verde Nuclear Generating Station near Phoenix.

-Calpine Corp.: Based in San Jose, Calif., Calpine has 23 power plant projects planned or under construction around the country, including Oregon, California and Arizona.

-Idaho Power: Provides electricity to Idaho and parts of Oregon. Has racked up a considerable bill buying spot power as a result of low hydro-power production and has proposed a 27 percent consumer rate increase.

-Enron Corp.: Houston-based energy marketing company offered to replace San Diego Gas & Electric as the city's principal electricity provider. Enron was one of George W. Bush's largest campaign contributors.

-President Bush: He prefers to see California solve its own energy problems and, through Abraham and Hebert, has rejected West Coast pleas for price caps. Many of the companies that now sell electricity to California were major contributors to Bush's election effort.

The Olympian Copyright 2000

http://news.theolympian.com/stories/20010225/HomePageStories/4621.shtml

-- Martin Thompson (mthom1927@aol.com), February 25, 2001