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VARIOUS APPROACHES TO SEIZURE

California lawmakers continue to publicly discuss various scenarios for seizing electric generation assets in order to regain control of California's runaway wholesale electric market. One scenario looks at taking over private power plants, perhaps contracting with regulated utilities like PG&E to run them, and let the courts decide what fair market price should be paid to the companies from which they are seized. Another scenario looks at seizing the generators' contracts with marketers, thus controlling where the power is sold and reducing price markups by eliminating the middleman in spot-market transactions. State Senator Debra Bowen, chair of the Senate Energy Committee, has suggested a third approach for California to acquire electric assets: purchasing all of PG&E Co. in bankruptcy court. She says such a move could benefit the state and keep PG&E property out of the hands of private companies that already have too much influence over the electricity market.

SEND GOUGERS TO JAIL

Lt. Gov. Cruz Bustamante has suggested the California Legislature enact a law to make it a felony for energy companies to charge unreasonable and unjust prices. Prosecutors could use findings by the Federal Regulatory Energy Commission that prices are unreasonable as a basis for prosecutions. Punishment would include restitution, fines, or jail time.

BLOW THE WHISTLE ON GOUGERS, COLLECT MILLIONS

Attorney General Bill Lockyer said he will invoke a state law under which whistle-blowers whose information leads to the successful prosecution of a false claim may be entitled to a percentage of the financial penalties, which can be three times the actual losses. Since billions of dollars could potentially be recovered if price gouging is proven against unregulated generators, "the award to an informant could potentially range from $50 million to hundreds of millions of dollars," Lockyer said, according to a report in the April 17 Los Angeles Times.

RELIANT'S PROFITS UP

While PG&E was belatedly reporting a loss of $3.6 billion for 2000, unregulated power generator Reliant Energy Inc. saw its first quarter revenue balloon to $13.28 billion, up from $4.21 billion a year ago. Revenue from Reliant's deregulated energy operations surged to $9.59 billion for the period, up from $2.15 billion a year earlier. Reliant executives declined to specify how much of the quarterly gain was derived from California, where the company owns about 3,800 megawatts of unregulated generating-plant capacity. Reliant's CEO said the company was "not going to be comfortable" with giving details on its performance in the California market. according to the April 17 Wall Street Journal. 

FERC HAS OPPORTUNITY TO CURB WHOLESALE POWER RATES

The Federal Energy Regulatory Commission must decide whether to renew energy producers' right-first granted in 1998 for three years and then subject to review-to sell power to California at whatever price the market will bear. "If FERC refuses to grant market-based pricing to all these guys," Stanford economist Frank Wolak told the Los Angeles Times, "we're done. The financial side of the California power market is solved."

FERC, of course, has shown little interest in curbing the profits of power producers. But to allow companies to continue earning market prices, FERC must now make a finding that the firms do not wield "market power"-the ability to drive prices up and keep them there by, for example, withholding electricity to create scarcity. Theoretically it should be hard for FERC to deny the existence of market power, since it found just last December that manipulation of California's electric market had created prices that were "unjust and unreasonable." 

But FERC has shown little interest to date in restraining prices, repeatedly claiming that high profits give producers an incentive to build more plants.

WILLIAMS PETITIONS FOR MARKET PRICES

One of  the first power producers to petition FERC for permission to continue charging market rates was Williams Cos. of Tulsa. Williams filed the petition in March, the same week that FERC made public an investigation of Williams, accusing the company of shutting down power plants last spring to drive up prices.

FREEMAN TO BE NEW ENERGY CZAR

Gov. Gray Davis has appointed S. David Freeman to be his "energy czar for conservation," said Davis spokesman Steve Maviglio on April 16. As czar, Freeman would administer a massive $850 million energy conservation program recently approved by the California Legislature. The Los Angeles Times reported that Davis was leaning toward naming Freeman to head the California Power Authority if the Legislature creates one. As envisioned by legislators, the power authority would have broad power over conservation programs, construction of new power plants and rehabilitation of current power facilities. It would also have the power of eminent domain under certain conditions, allowing it to seize land and existing power facilities. It might also be the vehicle by which the state would purchase electric transmission facilities currently owned by the state's investor-owned utilities. Freeman at one time was head of the Sacramento Municipal Utility District, where he was well regarded by Local 1245 for his understanding of labor's issues.