California Capsule: Ratepayers Lose Standing in PG&E Case
LCG, May 21, 2001U.S. Bankruptcy Judge Dennis Montali ruled on Friday that the 4 million customers of Pacific Gas & Electric Co. would have to look elsewhere for protection of their interests in the company's bankruptcy case."The Bankruptcy Code, and the Bankruptcy Court, were designed to resolve debtor-creditor problems," Montali wrote in his ruling. "State agencies are where issues such as rates for electricity are handled."The customers' panel had been created by U.S. Trustee Linda Ekstrom Stanley, who stocked the committee with activist consumer and business groups. She said she was "disappointed" in the judge's ruling, adding she believed it was "within our discretion to appoint a ratepayers committee."The ratepayers' committee was opposed by both PG&E and its creditors. The utility's counsel, James Lopes, argued that customers are not creditors or security holders and are not covered by bankruptcy law. "Does this mean we have 4 million creditors that we now have to classify and deal with?" he asked Friday.Robert Moore, a lawyer for the creditors' committee, said he feared that a ratepayers' committee would transform the bankruptcy case into a "political town hall meeting."Vegas Sports Book Lays Odds on BlackoutsRoxy Roxborough says ten will get you fifteen that rolling blackouts in California will continue past September 1. You bet $10, get $15 back and win $5 if you bet against the state getting its electricity act together by Labor Day. The odds are 1-2 on that bet, even money that the blackouts will last through New Year's Eve and 2-1 that they are still rolling next April.Roxy, who owns the syndicated service America's Line, took a careful look at California's electricity situation and laying odds came naturally. "He's done some work on it and did what he needed to do," said Benjamin Eckstein, chief executive of America's Line. "He's very serious about what he puts out, even if you can't bet on it."Stephanie McCorkle, a spokeswoman for the California Independent System Operator, said the ISO was not amused. "We're just not into playing game here," she grumped.California Gov. Gray Davis may have bet his political future on his solutions to the state's energy problems, but a spokesman said the governor would pass on the opportunity to place a bet. "We're doing everything we can to make sure that we don't have any blackouts," said Roger Salazar of Davis' office. "Our hope is that those folks end up on the losing side."
Public Power Purchase Alliance CollapsesThe Association of Bay Area Governments, which consists of local governments in the San Francisco Bay Area and is called A-Bag by most, had a deal to purchase electricity at bargain rates for 56 members, including Contra Costa County, The Alameda County Housing Authority and the cities of Berkeley, Albany, El Cerrito, Moraga, Orinda, Pleasanton and Vacaville, but the arrangement has collapsed in the face of soaring power prices paid by the State of California.Participants in A-Bag's power pool were in the 12th month of an 18-month contract with Calpine Corp. for 40 megawatts of firm power at attractive rates. They had saved so much money they were talking to Calpine about extending the contract for five years, and Calpine was receptive, according to spokesman Bill Highlander, who said "We were pleased to work with them. We want to sell power."But A-Bag's group needed 10 more megawatts, and the price for that power was 30 or 40 times what the governments expected. "Our costs went up a lot more than we thought," said Jerry Lahr, manager of the A-Bag power pool.One problem was, the power pool got only preliminary estimates of their costs concurrently with power usage, with the actual bills arriving months later. When the estimate for May usage of the non-Calpine power arrived, it was $5 million more than expected, and there was also a bill for the first four months of the year that was $4 million higher than planned.The agencies considered rationing electricity to stay within the 40 megawatts provided by Calpine, but found that transmission costs charged by Cal-ISO are so high there was no benefit.Davis Hands Out Conservation LightbulbsGov. Gray Davis on Saturday went from house to house in the Southern California beach community of Venice, handing out fluorescent lightbulbs and urging resident to conserve electricity. At least, he stopped at two Venice homes, according to the Los Angeles Times.Estella Burnett thanked the governor for the lightbulbs, saying they "might help, but it's up to us to conserve." She also thought others could do something to help out the energy problems. "They can build more power plants so we don't have to take up their slack," she said.Davis walked across the street to the home of John Ghanie, who conceded "I think he's trying to do something." But, like Burnett, Ghanie said "The lightbulbs are good, but we need plants. This is like a Band-Aid. We need a cure."Reliant Responds to Governor's ChargesJoe Bob Perkins, a vice president of Reliant Energy inc., defended his company Friday against the mounting vitriol of attacks by Gov. Davis, who has singled out the company as the worst example of price-gouging out-of-state power producers."We're really proud of our contributions to the California market today," Perkins told reporters during a telephone news conference Friday. He also said he didn't think Reliant was being singled out in state investigations which regulators show power plants were manipulated to drive up prices."The overall picture that has to be looked at is how much we've run these plants," Perkins said. "When we run plants at these levels, we have to work on them more."When Reliant recently charged Cal-ISO $1,900 per megawatt hour for a small amount of power, the company came under immediate attack. At the time, a company spokesman said Reliant would have preferred to keep the generating unit off line and bid deliberately high hoping its offer would not be accepted.
Perkins had a slightly different story. He said the power came from a peaking unit that, because of emissions restrictions, can be run only eight or nine days a year. Perkins said the power was priced so high that it would be treated "as a canteen across a long, hot desert.""The state insisted on drinking from that energy canteen," he said.
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