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THE CALIFORNIA ENERGY CRISIS

DWP Earns Top Dollar Selling Power

In sales to the state, the L.A. agency's asking price Thursday hit $1,400 per megawatt-hour, sources said, compared with an average of $200 to $450 in the last couple of months.

February 16, 2001|NANCY VOGEL and RICHARD SIMON | TIMES STAFF WRITERS

The Los Angeles Department of Water and Power earned top prices this week for power it sold to the state, according to sources with the California Independent System Operator.

The DWP earned about $1,300 for each of the nearly 1,000 megawatt-hours it sold on Wednesday, sources said. On Thursday, the DWP was asking $1,400 per megawatt-hour.

The sources spoke on condition of anonymity because price information is competitive and thus confidential under Cal-ISO rules. The prices paid to the DWP are no record for the Cal-ISO, but they are the among the highest that have been paid in recent weeks, sources said.

DWP officials said the prices--which will be paid for with taxpayer money through the Department of Water Resources--reflect the cost of natural gas on the spot market.

DWP spokesman Frank Salas said his agency last week got a $50-million check from the state for power sold since mid-January. The prices DWP charges have averaged $200 to $450 per megawatt-hour in the last couple of months, he said.

"We're trying to cooperate and we're getting bashed," he said, responding to criticism that the DWP is gouging the state. "They only talk about the spikes."

In other developments:

* Rep. Henry A. Waxman said Thursday that Californians "feel abandoned" by the Bush administration, which has opposed price controls on wholesale electricity prices. The Los Angeles Democrat urged the president and Congress not to "cynically use California's plight as a ruse for undoing the nation's environmental laws."

A White House spokeswoman responded: "We have committed to helping California in any responsible way."

Waxman spoke during a House energy and air quality subcommittee hearing called by Chairman Joe Barton (R-Texas) to keep California's electricity woes from souring Congress on deregulation.

But Waxman used the session to dispute assertions that environmental laws have contributed to the power crunch. He accused the White House of mischaracterizing Davis' request for the administration to expedite federal reviews of proposed power plants as a request to relax environmental rules.

* The state Public Utilities Commission took action to help Pacific Gas & Electric assure its natural gas suppliers that they will be paid, despite the utility's poor credit rating and cash shortage.

Meeting in San Francisco, the PUC voted 3-0 to extend by three months an order granting PG&E permission to use unpaid gas customer accounts as collateral to buy natural gas. The utility sought an extension on grounds that procuring gas supplies will remain difficult until the energy crisis is resolved and PG&E returns to financial health.

The company also warned that its gas inventory for residential customers and small businesses could be exhausted as soon as next week, possibly causing diversions of gas from non-core customers, including electricity generators. After the hearing, PG&E officials added that the company has signed up only about 10 of the 40 gas suppliers it normally has.

Power Points

Background

The state Legislature approved electricity deregulation with a unanimous vote in 1996. The move was expected to lower power bills in California by opening up the energy market to competition. Relatively few companies, however, entered that market to sell electricity, giving each that did considerable influence over the price. Meanwhile, demand has increased in recent years while no major power plants have been built. These factors combined last year to push up the wholesale cost of electricity. But the state's biggest utilities--Pacific Gas & Electric and Southern California Edison--are barred from increasing consumer rates. So the utilities have accumulated billions of dollars in debt and, despite help from the state, have struggled to buy enough electricity.

Daily Developments

* Gov. Gray Davis prepared to release a rescue plan that includes a ratepayer surcharge and an offer to buy the utilities' massive transmission system.

* The DWP was charging the state $1,400 per megawatt hour, $100 more than the going price just a day before.

* Rate negotiations between the state and alternative energy producers neared resolution, but private utilities may not save as much as planned.

Verbatim..TE:

"I'm trying to make sure that whatever help they get, we get value back in return." -- Senate President Pro Tem John Burton (D-San Francisco) on aiding the utilities.

*

Vogel reported from Sacramento and Simon from Washington, D.C. Times staff writer Tim Reiterman in San Francisco contributed.

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