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CA ENERGY CRISIS UPDATE
Contributed by LU 1245, Walnut Creek, CA

May 14, 2001 

DELAY MEANS STATE MISSES PRIME TIME FOR BOND SALE

Gov. Gray Davis signed a bill May 10 that allows the state to sell a record-setting $13.4 billion revenue bond package to finance past and future electricity purchases, but the bonds cant be sold for another 90 days because Republicans in the Legislature denied the bill the two-thirds majority required to put it into effect immediately. The only Republican to vote for the measure was Sacramento-Area Assemblyman Anthony Pescetti, who Local 1245 endorsed in the last election. Since January the state has committed $6.7 billion from its budget to make last-minute electricity purchases, and is attempting to purchase additional power through long-term contracts. By delaying the bond issuance until August the state will now have to sell its bonds during one of the worst times of years for such transactions.

PLANT SHUTDOWNS EXAMINED

Californias power plants have been shutting down at rates two, three and four times higher than the previous year, according to figures made public by the state Energy Commission. In April of this year the average amount of power offline was 14,990 megawatts, about one-third of the states total needs. Thats a 350% increase over April of 2000. During this same period, wholesale electric rates rose from about $30 a megawatt-hour to a new peak last week of $2,000 a megawatt-hour.

ASSEMBLY COMMITTEE DOCUMENTS MANIPULATION

El Paso Corp.s marketing arm dominated space on a major natural gas pipeline into California and prevented other shippers from importing gas into California from the Southwest starting in early 2000, an Assembly Subcommittee on Energy Oversight has found. El Pasos action created an artificial demand-supply crunch that drove up costs for both gas and electricity, the panel concluded. The state paid $6.6 billion for natural gas in 1999, but that figure nearly doubled in 2000. In 2001, California had spent $7.9 billion on natural gas by March.

THREE REPUBLICAN CALIFORNIANS VOTE AGAINST PRICE CAPS

California Congressional Representatives George Radanovich, Chris Cox and Mary Bono, all Republicans, voted against a proposal by Senator Dianne Feinstein to cap wholesale electricity prices. The Federal Energy Regulatory Commission has a legal obligation to intervene if wholesale power prices are deemed unjust and unreasonable, but so far the agency has refused to impose price caps.

UTILITIES UNHAPPY WITH CHENEYS SLIGHT

When Vice President Cheney recently said that conservation is not a sufficient basis for a sound, comprehensive energy policy, utility companies were among those who disagreed. Over the last ten years, we have conserved enough energy to save us the equivalent of having to build one huge new power plant, said Mike Weedall, a manager at the Sacramento Municipal Utility District. And this is what Bob Royer of Seattle City Light told the New York Times: These guys in the Bush administration are doing this manly stuff, putting their horns on to make it sound like conservation is for sissies. But we know from experience that conservation equals generation. They are the same.

UTILITIES STOCKING UP ON GAS

Utilities in the US are storing away natural gas at a rate thats almost three times faster than normal to ensure adequate winter supplies for homeowners furnaces, according to Bloomberg.com. U.S. inventories rose 331 billion cubic feet over the past five weeks, a record for the period. The increased buying could be putting upward pressure on prices this summer, but the tradeoff could be lower prices in the winter.

POWER PLANTS GOING ON-LINE

New power plants with 22,000 megawatts of gas-fired generating capacity started up last year. Thats more than the 21,400 megawatts added between 1995 and 1999, according to the US Energy Departments Energy Information Administration. Power plants with another 25,000 megawatts of capacity will start up this year.

BUSINESSES FIGHT RATE PROPOSAL

California businesses launched an aggressive campaign to head off a major shift in state energy policy that could force the biggest companies to pay much more for power. Since 1985, electricity rates for Californias biggest companies have dropped about 17% while rates for millions of homeowners and renters have risen more than 39%, according to a report in the San Jose Mercury News. Under a plan now being considered by the California Public Utilities Commission, average rate for the states biggest users could double.