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California and the West : THE CALIFORNIA ENERGY CRISIS

Secrecy on Power Pacts' Terms Decried

February 08, 2001|RONE TEMPEST | TIMES SACRAMENTO BUREAU CHIEF

SACRAMENTO — Since it became the biggest power buyer in the West last month, California has spent nearly $800 million on electricity. But the public knows almost nothing about who is receiving the money and whether the state is getting a good deal.

Likewise, when Gov. Gray Davis on Tuesday announced the first of the long-term contracts for electricity that he hopes will lift the state out of its power crisis, he released scant information. The first substantive details emerged only when one of the sellers, Calpine Corp. of San Jose, announced Wednesday that it had signed a multiyear contract with the state worth $4.5 billion.

Davis defends his secrecy by saying that detailed information made public could work against the state in the sensitive negotiations.

"To discuss the specifics of the contracts while we are in the negotiation process is not in the interest of the people of California," said Davis spokesman Steve Maviglio. "The more information we give out, the simpler it becomes [for suppliers] to manipulate the market."

Maviglio said the governor intends to release the detailed information "eventually" but did not specify when.

California is currently spending taxpayer money for electricity at a rate of $1.3 billion a month. The Legislature recently allocated $900 million for electricity purchases, and the administration has asked for $500 million more by Feb. 15.

For the Record
Los Angeles Times Friday February 9, 2001 Home Edition Part A Part A Page 3 Metro Desk 2 inches; 46 words Type of Material: Correction
Power prices--A quote in a Thursday article about price secrecy in the power crisis was misattributed. The speaker should have been identified as Terry Francke, general counsel for the California First Amendment Coalition. His quote was: "Their claim that secrecy is necessary has to be backed up by expert economic testimony."

The governor's strict guarding of information, even from senior staffers in Sacramento, has frustrated legislators and other elected officials. Four newspapers, including The Times, have filed Public Records Act requests for the contract information, including the name of the seller, the price and other terms of the contract.

"The Public Record Act allows information to be kept confidential if it is in the best interest to keep it confidential," Maviglio said.

But Terry Francke, general counsel for the California First Amendment Coalition in Sacramento, said: "There is certainly no specific provision in state law that says clearly that power price information is exempt from disclosure."

And Assemblyman Bill Leonard (R-San Bernardino), one of the Legislature's few energy experts, said: "Their claim that secrecy is necessary has to be backed up by expert economic testimony."

He contends that the dangers of the secrecy policy outweigh any negotiating advantages.

"I believe the public has the right to know this, and in real time," he said. "The public right to know is the check against corruption, against insider dealing and the way that you bring the public pressure to bear on market gouging."

State Controller Kathleen Connell, a candidate for mayor of Los Angeles, raised some alarms in the governor's office Wednesday when she announced plans to unveil a new Web page detailing how much is being spent on a daily basis as well as the price per kilowatt hour.

But that information comes to the controller only when the governor's office and the state buying agent, the Department of Water Resources, ask her to cut a check for the purchase. That process can take 60 days.

Davis' chief of staff, Lynn Schenk, contacted Connell on Wednesday to make sure the controller was in line with the governor's policy.

"We are confident that she is not going to give away the particulars that are necessary to game the market," Maviglio said. "We have been in contact with her and made her aware of how sensitive the information is. If the information is from three weeks ago, it doesn't matter."

Late Wednesday, Connell postponed her plans for the Web site.

Davis does have supporters of his position in the Legislature, including Senate President Pro Tem John Burton (D-San Francisco).

"I know this secrecy issue is a big deal for some people, and I understand that," Burton said. "But if you've got somebody willing to sell for $6, and he finds out somebody else is getting $8, what do you think that first guy is going to do? It's pretty simple. He's going to raise his price."

Burton said he would favor making the numbers public at some point, but maintains that right now it's a matter of "basic economics" and that the state could be badly hurt by disclosure of such information.

Leonard said that when he read a statement by Davis' chief negotiator, S. David Freeman, saying that he needed the secrecy to conceal his hand from private generators, he "laughed out loud."

"The generators have all the leverage right now," Leonard said. "They know how much money we have. They know what you and I are paying in rates. They know how much revenue bonds are available to back that up. They know the load, the demand that has to be filled each day because that is posted by the [California Independent System Operator]. They know everything they need to know as a seller."

Maviglio said the Davis secrecy policy was borrowed from the only equivalent buying authority it could find, the New York ISO, which controls electricity on the New York power grid and operates the market for about half the electricity traded in that state. The New York ISO, said spokesman Ken Klapp, releases the prices of the power sales after a six-month delay, but even then does not provide the names of buyers and sellers or the terms of the contracts.

Klapp said some of the New York ISO's customers are public entities but, unlike the situation in California, all the deals are on the one-day-ahead, two-day-ahead and real time market. Davis is trying to conclude contracts that stretch as far as 10 years into the future.

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