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Date: Wed, 21 Mar 2001 02:26:00 -0800 (PST)
From: susan.mara@enron.com
To: alan.comnes@enron.com, angela.schwarz@enron.com, beverly.aden@enron.com, 
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Subject: Great Sacramento Bee Editorial Today -- CA Gray-Outs
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Sue Mara
Enron Corp.
Tel: (415) 782-7802
Fax:(415) 782-7854
----- Forwarded by Susan J Mara/NA/Enron on 03/21/2001 10:25 AM -----

=09Jean Munoz <jmunoz@mcnallytemple.com>
=0903/21/2001 09:27 AM
=09=09=20
=09=09 To: Katie Kaplan <kaplan@iepa.com>, "'Andy Brown (E-mail)'"=20
<ABB@eslawfirm.com>, "'B Brown Andy (E-mail)'" <andybrwn@earthlink.net>,=20
"'Baker Carolyn (E-mail)'" <cabaker@duke-energy.com>, "'Bob Escalante=20
(E-mail)'" <rescalante@riobravo-gm.com>, "'Bob Weisenmiller (E-mail)'"=20
<rbw@mrwassoc.com>, "'Curtis Kebler (E-mail)'"=20
<curtis_l_kebler@reliantenergy.com>, "'Douglas Kerner (E-mail)'"=20
<DKK@eslawfirm.com>, "'Greg Blue (E-mail)'" <gtbl@dynegy.com>, "'Jan=20
Smutny-Jones (E-mail)'" <smutny@iepa.com>, "'Jeff Dasovich (E-mail)'"=20
<Jeff.Dasovich@enron.com>, "'Joe Ronan (E-mail)'" <joer@calpine.com>, "'Joh=
n=20
Larrea (E-mail)'" <john.g.larrea@williams.com>, "'John Stout (E-mail)'"=20
<John_H_Stout@reliantenergy.com>, "'Julee Malinowski-Ball (E-mail)'"=20
<jmball@ns.net>, "'Kassandra Gough (E-mail)'" <kgough@calpine.com>, "'kent=
=20
Palmerton (E-mail)'" <kent.palmerton@williams.com>, "'Kristin Vellandi=20
(E-mail)'" <kvellandi@pstrategies.com>, "'Lynn Lednicky (E-mail)'"=20
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(E-mail)'" <nam.nguyen@powersrc.com>, "'Norton Kelli (E-mail)'"=20
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<jackp@calpine.com>, "'Richard Hyde (E-mail)'" <rwhyde@duke-energy.com>,=20
"'Rob Lamkin (E-mail)'" <rllamkin@seiworldwide.com>, "'Roger Pelote=20
(E-mail)'" <roger.pelote@williams.com>, "'Stephanie-Newell (E-mail)'"=20
<stephanie-newell@reliantenergy.com>, "'Sue Mara (E-mail)'"=20
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=20
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=20
<kelly@hnks.com>, "'Chuck Cole (E-mail)'" <ccole@advocation-inc.com>,=20
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(E-mail)'" <djsmith@smithandkempton.com>, "'Hedy Govenar (E-mail)'"=20
<hgovenar@acom2.com>, <mmoretti@mccabeandcompany.net>, "'Maureen OHaren=20
(E-mail)'" <Oharen@hmot.com>, "'Mike Monagan (E-mail)'" <mrmonagan@aol.com>=
,=20
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<robbiz@cwo.com>, "'Ron Tom (E-mail)'" <Rtom@govadv.com>, "'Scott Govenar=
=20
(E-mail)'" <sgovenar@govadv.com>, "'Susan Mccabe (E-mail)'"=20
<sfmccabe@mindspring.com>, <rtemple@mcnallytemple.com>,=20
<megan.beiser@edelman.com>, <tracy.fairchild@edelman.com>,=20
<deborah.fiorito@dynegy.com>, <tcwillia@duke-energy.com>, <mstultz@epsa.org=
>,=20
<lchurch@epsa.org>
=09=09 cc:=20
=09=09 Subject: Great Sacramento Bee Editorial Today

=01;
  =20
------------------------------------------------------------------------
B=01; E=01; E=01; =01; E=01; D=01; I=01; T=01; O=01; R=01; I=01; A=01; L=01=
; S
------------------------------------------------------------------------

Our first Gray-outs: These power outages are purely a failure of leadership


(Published March 21, 2001)=20
Add a new term to the electricity nomenclature -- the Gray-out. This is a=
=20
power outage caused by politics in Sacramento under Gov. Gray Davis, rather=
=20
than some unavoidable mismatch between supply and demand.

This is March. Peak demand is thousands upon thousands of megawatts lower=
=20
than it will be this summer. And yet the lights are going out.

These rolling Gray-outs trace squarely back to state government's failure t=
o=20
figure out a way to pay for all the power that California needs. The=20
generators who aren't getting paid are beginning to go temporarily out of=
=20
business. Day by day, less and less power is available for the grid, to the=
=20
point that a little bit of spring sun is enough to overtax supply and turn=
=20
out the lights. Unbelievable.

It's true that the governor is bleeding the state's coffers to the tune of=
=20
about $50 million every day to pay the big for-profit generators for their=
=20
supply. This is his short-term solution, until the longer-term solution --=
=20
whatever that is -- kicks in. But no, even that huge payment isn't all the=
=20
money needed to pay all the generators.

Neglected by the government plan are about 600 little guys that produce 20=
=20
percent of the electricity supply. These are generators dotted throughout t=
he=20
state known as Qualifying Facilities. A creation of the alternative energy=
=20
movement of the 1970s, these are plants powered by natural gas, the sun and=
=20
the wind. Unlike the big for-profit generating companies, these QFs are=20
contractually tied to the giant utilities, Southern California Edison and=
=20
PG&E. And the utilities haven't been paying them for weeks and weeks -- at=
=20
this point the QFs are owed $1.48 billion.

Not surprisingly, some of these generators can't afford to keep producing=
=20
power for free. Grid operators say that these QFs could be producing about=
=20
6,000 megawatts if they were being paid. Instead, they are producing about=
=20
3,100, and the amount is decreasing. Outages were triggered on Monday becau=
se=20
the grid was short about 1,000 megawatts of load. This math clearly reveals=
=20
how avoidable this disruption was. Call it a rolling Gray-out.

Bipartisan legislation has languished in Sacramento for weeks that would cu=
t=20
in half what these QFs have been billing the utilities. The savings are=20
possible by moving these contracts into long-term deals and out of the=20
higher-priced spot market. This piece of the overall solution has been=20
stalled while the governor has been at work on the others, such as returnin=
g=20
the big utilities to solvency and locking in power purchases long-term with=
=20
the big for-profit generators. Disregarding the little guys, however, is a=
=20
mistake that the governor and Legislature should correct immediately.
