California Power Talks Begin

greenspun.com : LUSENET : Unk's Wild Wild West : One Thread

http://dailynews.yahoo.com/h/ap/20010626/us/power_woes_3.html

Tuesday June 26 12:14 PM ET

California Power Talks Begin

By MARK SHERMAN, Associated Press Writer

WASHINGTON (AP) - Energy users and providers are billions of dollars apart in their estimates of how much the power crisis in the West has cost them. The federal official overseeing confidential settlement talks wants them to come to terms quickly.

With a two-week deadline to reach an agreement, Curtis L. Wagner, chief administrative law judge of the Federal Energy Regulatory Commission (news - web sites), met with the parties separately Tuesday. He spoke with power marketers, municipal utilities and public officials from the Pacific Northwest and Southwest.

Excluded from Tuesday's meetings were California's representatives, who are preparing to present their justification Wednesday for $9 billion in refunds the state claims it is owed.

Led by California, Western states say power-generating companies overcharged them by $15 billion in the past year. The power companies say the prices they charged were justified and California's cash-strapped electric utilities owe them billions.

Michael Kahn, California's chief negotiator, said the money his state claims should be the first order of business in any settlement

``We want our refunds. We want them now,'' said Kahn, chairman of the California Independent System Operator (news - web sites), which manages the state's power grid.

The states claim the companies unfairly drove up prices to take advantage of a power shortage. Prices frequently surpassed $300 a megawatt-hour, 10 times what they were in 1999. One megawatt is enough to power about 750 homes.

The power-generating companies argue the prices were the result of several factors, notably the rising cost of natural gas used to power their plants. In some cases, older, more costly power plants were pressed into service to deal with the high demand and tight supply.

The judge, who is playing a mediator's role in the negotiations, said he has seen nothing to change his previously stated view that refunds in any settlement probably would not exceed $2.5 billion.

He cautioned all sides that a brokered settlement would be preferable to a plan he would recommend to federal regulators should talks fail.

More than 150 people representing about six dozen entities gathered in a government hearing room for the start of negotiations Monday. The talks were one result of a federal order last week extending price controls on spot power sales in California and imposing limits in 10 other Western states.

Wagner laid out several issues negotiators will have to tackle, including how much generators are owed for power they supplied to California without getting paid.

The size of the refunds and the unpaid bills ``must be, both ways, resolved at the outset to put everyone on the same playing field,'' Wagner said. Any settlement probably would also have to answer whether the generators should have immunity from existing and future lawsuits and prosecution, he said.

The parties also have to try to reach agreement on additional long-term power contracts, which would reduce the amount of power California would have to purchase on the volatile spot market.

-

On the Net:

FERC: http://www.ferc.gov/

-- (in@energy.news), June 27, 2001


Moderation questions? read the FAQ