Index to the web page below:
February 16, 2001 Business Journal
August 5, 2001 Sacramento Bee
August 29, 2001 Sacramento Bee
September 1, 2001 Sacramento Bee
September 3, 2001 Sacramento Bee
September 6, 2001 Sacramento Bee Neighbors -
North
September 6, 2001 Rio Linda Elverta News (two
articles)
September 27, 2001 Rio Linda Elverta News (two
articles)
October 4, 2001 Rio Linda Elverta News (three
articles)
October 11, 2001 RioLinda Elverta News
October 18, 2001 Rio Linda Elverta News
October 18, 2001 Sacramento Bee Neighbors -
North
October 25, 2001 Rio Linda Elverta News
November 1, 2001 Rio Linda Elverta News
November 2, 2001 The Miami Herald
November 4, 2001 Sacramento Bee
November 6, 2001 Sacramento Bee
November 8, 2001 Rio Linda Elverta News
November 15, 2001 Rio Linda Elverta News
November 17, 2001 Sacramento Bee
November 21, 2001 Sacramento Bee
November 28, 2001 San Francisco Chronicle
November 29, 2001 Rio Linda Elverta News (three
articles)
December 6, 2001 Rio Linda Elverta News
December 7, 2001 Sacramento Bee
December 9, 2001 Sacramento Bee
December 11,2001 Sacramento Bee (Editorial cartoon)
December 14,2001 Sacramento Business Journal
(two articles)
December 16,2001 Sacramento Bee
December 26, 2001 Sacramento Bee
January 7, 2002 Sacramento Bee
January 13, 2002 Palm Beach Post (two letters)
January 13, 2002 Palm Beach Post
January 17, 2002 Sacramento Bee
January 31, 2002 Rio Linda News (two letters)
February 21, 2001 Rio Linda News
February 21- March 5 Palm Beach Post
(11 articles: FPL in Florida)
"...But while the mayor, two state representatives and a congressman turned out at a signing ceremony and supported the project, members of the San Joaquin County Board of Supervisors were conspicuously absent.
"Board Chairman Dario Marenco and Supervisor Steve Gutierrez, who together represent most of the city of Stockton, oppose the proposed plant. The board voted to oppose to the East Altamont Power Project as well.
"A low-income neighborhood is located downwind from the project site,
and the supervisors are concerned about its impact on the community.
"But the same is true for neighborhood groups, he added: 'If you do
not make the people from the neighborhoods happy, it doesn't matter if
the developers give you a lot of money.'..."
Sacramento Bee Dec. 9, 2001
Everyone focusing on making it possible for Natomas to preserve the small-town feel of walking to work, schools and shopping should understand that this area will lose all of that when the proposed megawatt power plant is built south of Elkhorn Boulevard [this should say Elverta Boulevard], next to the levee.
This gas-guzzling, smog-belching smokestack will ruin any chance to achieve a quiet, clean and healthy place to call home. New homeowners are not being told of this negative impact on their investment. The 24-hour noise, 24-hour smog and night-light pollution combined with the wonderful view of the huge smokestack will be the target of their frustrations. They will wish it was a big box.
Jonny Davis, Elverta
Sacramento Bee Dec. 26, 2001
[Note that the Bee incorrectly reported in this article that FPL asked the Energy Commission to suspend it's application. The fact is that the Energy Commission put the application on suspension.]
By Carrie Peyton -- Bee Staff Writer
Sacramento Bee Jan 7, 2002, Page A1
Look closely at FPL's numbers
The Jan. 3 headline "FPL review might cost customers millions" reports another absurd power play by Florida Power & Light Co. FPL spends $10.84 million; $5 million of that to outside law firms. Another utility, Florida Power, expects to spend $1.64 million total. Of the $5 million to law firms, how much was for special-interest lobbying? And FPL manages efficiently?
Florida Public Counsel Jack Shreve should realize that it's time for some strong ratepayer advocacy. Don't be intimidated by FPL's strong-arm negotiating tactics. And the Florida Public Service Commission should not forget that it once was an elected commission.
How about the $36 million-plus bonus paid to former Chief Executive Officer James Broadhead and other millions paid to his executive inner circle in connection with the failed acquisition of Entergy? A cardinal sin in deal-making is to structure a deal so that executives are paid excessive bonuses for failure. Mr. Broadhead lavishly praised Entergy's CEO when the deal was announced. Entergy's board later was told by Mr. Broadhead that its CEO was inept. And the ratepayers paid more than $100 million for that huge gaffe.
Review cross-subsidy issues between FPL and its non-utility operations. Review FPL's high-cost capital structure that supports FPL Group Capital's credit ratings, its non-utility financing subsidiary. This is the tip of the iceberg. Review years of accelerated asset depreciation, which sets the stage for a huge stockholder gain if assets are sold or moved to the non-utility side and the industry is deregulated.
Mr. Shreve, ratepayers need to achieve a fair shake in a negotiated settlement. It's been 19 years since FPL's expenses have been closely scrutinized.
ROBERT R. SEARS
Jupiter
Editor's note: Robert R. Sears is a former treasurer of FPL.
Letter to the Editor, From The Palm Beach Post January 13, 2002:
Let FPL pay lawsuit cost itself
As I recall, FPL raised rates when the price of oil went up. The company told us its costs went up, and so our costs had to go up. When the price of oil dropped dramatically, our rates remained high, if not higher than before.
Now, this utility wants more than $10 million in increased revenue. Since when are the costs of a lawsuit passed on to customers? Why aren't these charges passed on to their stockholders? Whom do the members of the Public Service Commission represent?
ANITA FRIEDMAN
Palm Beach
From The Palm Beach Post January 13, 2002
"Enron is one of the biggest proponents of competition," said Hay, who
prefers the status quo in Florida. "They were a large lobbying force. Without
their resources, there will be fewer people or support for deregulation.
I think a combination of California and Enron has caused states to back
off of deregulation. It's going to slow down, if not reverse course."
From The Palm Beach Post January 13, 2002
By: Dale Kasler and Carrie Peyton Bee Staff Writers
Sacramento Bee Jan 17, 2002, Page A1
The following is linked to the indexes above:
More power, cleaner skies
To build generators, companies must cut pollution elsewhere.
Take a region with air so bad it flunks federal standards. Add a demand for electricity that nearly has outpaced local power plants. Mix in a forecast for furious growth.
The resulting brew has produced the Sacramento region's latest power struggle: Can the smoggy metropolis open its doors to three proposed electricity-generating plants projected to pump 1,000 tons of pollutants into the air every year?
Air quality regulators say yes, provided energy companies can ensure emissions from other area businesses will be cut by more than 1,000 tons a year. That way, the region's air overall actually would become cleaner as the high-polluting electricity generators go online. So goes the theory of "pollution trading."
"Making the air dirtier ... that is an absolute nonstarter in California," said David Parquet, Enron Corp.'s vice president for project development in the West. To get cleaner air and more power plants, "we have to start thinking a little more out of the box."
To that end, Enron, FPL Energy and the Sacramento Municipal Utility District have been offering record-high payments to businesses willing to go further than laws require in cleaning up their operations.
In exchange, the energy companies would receive "emission reduction credits" they can use to offset pollution from three power plants proposed for communities ringing Sacramento.
Together, the natural gas-burning generators proposed for Roseville, Rio Linda and the south Sacramento County town of Herald would bring an estimated 1,700 to 2,400 megawatts online between 2004 and 2005.
The projects must undergo public hearings and environmental reviews by the state Energy Commission. They each also need a permit from the Sacramento Metropolitan Air Quality Management District.
Powered by natural gas and steam, and equipped with the best available pollution controls, the plants would produce only a fraction of the pollution of older generators. Yet they still are major polluters subject to the "new source review" provisions of the federal Clean Air Act.
Under the law, developers of power plants, refineries and other high-polluting industrial operations cannot get a building permit in areas that fail to meet federal clean-air standards unless they can more than offset the amount of additional smog that would be generated.
In federally designated "severe non-attainment areas" such as the six-county Sacramento region, major polluting businesses seeking to start or expand operations must eliminate at least 1.3 tons of pollutant for every ton they expect to release.
Ironically, companies have a hard time finding pollution to buy and sell in the Sacramento area, one of the nation's 10 smoggiest urban areas. That's because most smog-causing emissions come from vehicles, and because smog rules have left businesses little room for improvement.
The energy companies said they have made considerable headway, nevertheless, by turning to operations that previously have not been tapped for purchase of pollution credits, such as agricultural burning, unregulated sources such as diesel-powered irrigation pumps, and lightly controlled wheels of commerce such as locomotives.
With energy companies trying to build plants throughout the state, market-driven prices are at an all-time high for the right to spew air pollution.
Air credits now account for close to 10 percent of the cost of a new power plant in California, Enron officials say. In the past four years, the top credit price in the Sacramento region has quadrupled to $40,000 per ton of pollutant, according to energy consultants and producers.
"To a degree, no amount of money will get you where you want to be (in the Sacramento area)," said Kelly Brodbeck, an Enron project developer. "And if we don't have cooperation from the regulatory authorities, plants aren't going to get built."
California smog regulators, however, are in an especially cooperative mood these energy-short days. They're under orders from Gov. Gray Davis to accommodate power plant construction as much as they legally can.
The Sacramento region generates less than half its own power, so little that the local grid has approached collapse, utility experts say. They agree that either additional power generation or upgraded transmission is critical to the region's growth.
Statewide, officials are entertaining pioneering proposals to eliminate smog and grit from sources that have been off-limits to credit buyers because the emissions reductions are difficult to track and maintain.
San Diego County regulators last year approved a unique proposal by Calpine to offset pollution from the Otay Mesa power plant by outfitting diesel garbage trucks, street sweepers and sightseeing boats in the region with low-emission, natural gas engines. Such creation of "mobile emissions offsets" set a precedent for other industrial projects.
Energy producers now are eyeing high-polluting tugboats in Long Beach, diesel-belching ferries in San Francisco Bay, and dirt roads that could be paved to cut dust in the Southern California desert community of Victorville, according to Mike Tollstrup, a state Air Resources Board official reviewing power plant development.
In the Sacramento area, Enron is looking at offsetting pollution from its planned 750-megawatt plant in Roseville by paying Union Pacific Corp. to install clean-burning engines in its diesel locomotives at the Roseville switchyard.
Neighbors have complained of increased diesel fumes and rail traffic - dozens of trains daily - following Union Pacific's merger with Southern Pacific Rail Corp. in 1996. Locomotives emit six to seven times as much cancer-causing soot as big-rig trucks, according to state officials.
SMUD, one of the nation's largest municipal utilities, has an agreement pending with an undisclosed owner of 1,600 acres of rice in southern Sutter County to plow under straw waste rather than burn it after harvest, said Mahesh Talwar, an environmental consultant who arranged the deal for the landowner.
Talwar would not divulge exact terms of the deal, but he said the utility would provide the landowner a one-time payment ranging from $20 to $70 above the $35 to $80 per acre it costs to till the fields. The utility's board of directors Thursday authorized its staff to execute the agreement for purchase of 63 tons per year of emission reduction credits.
FPL Energy, an affiliate of Florida Power & Light, that state's largest utility, has lined up agreements with growers to electrify their diesel-burning irrigation pumps that run without pollution controls, state and local smog officials said.
An FPL representative said the company has secured nearly 90 percent of the pollution offsets needed to build its proposed 560-megawatt plant in Rio Linda, but she would not identify the sources of the credits.
"The more public attention that comes to this, the more difficult it is to obtain these credits at a reasonable price," said spokeswoman Carol Clawson.
Other polluting businesses are paying close attention. They want to make sure some credits are left for them to expand.
Aerojet officials, for example, are scrambling to acquire credits to compensate for the pollution to be released in three test firings of its Atlas V rocket motors.
"It's kind of a double-edged sword," said Carolyn Craig, an environmental specialist for the Rancho Cordova defense contractor. "We're concerned about blackouts here, so we want to support everything that can bring power to the area. But on the other side, the power plants obviously are scooping up what little credits are available."
People living near the proposed plants also have concerns. While air quality may improve in the region as a whole, it may worsen in neighborhoods surrounding the plants.
Emissions posing the greatest health risk to neighbors would be "particulate matter," microscopic contaminants produced in the natural gas combustion that can lodge in the lungs and spur respiratory and heart problems.
"What kind of stuff is going to be raining down on us?" said Rio Linda resident John Vierria, who lives near the site of FPL's proposed plant.
* * *
The Bee's Carrie Peyton can be reached at (916) 321-1086 or cpeyton@sacbee.com.
Graphic Text Sacramento Bee / Scott Flodin
How pollution credits work: Pollution trading allows growing businesses
flexibility in meeting Clean Air Act limits. Instead of investing in emission
controls, companies can pay to have comparable amounts of pollution reduced
at other businesses in the area, for less cost. For example:
1. SMUD wants to build a natural gas-burning power plant at Rancho Seco that will emit 230 tons of air pollutants per year. To obtain a construction permit, SMUD must acquire 299 pollution credits.* 2. In one of its deals, SMUD agrees to pay a Sutter County rice grower to cease post-harvest burning of crop waste. 3. The Sacramento Metropolitan Air Quality Management District must approve the deal, and the grower must record the prohibition of agricultural burning on property deeds. 4. SMUD banks 63 pollution credits toward the 299 it needs.
*230 of the credits are needed to offset the power plant pollution.
The remaining 69 achieve the required net gain in regional air quality.
1. Proposed SMUD power plantSources: SMUD, OceanAir Environmental, Feather River Air Quality Management District.
2. Rice farmer who signed deal with SMUD
* Proposed Enron power plant
* Proposed FPL Energy power plant
Power games
The Nov. 4 article "Power play" addresses a crucial issue currently taking place in our own backyard.
Florida Power and Light (FPL) has applied to build a 560 megawatt power plant in the Rio Linda-Elverta area. The proposed plant is less than a mile southwest of Elverta Elementary school. According to the utility's map included in its application, the school resides in the area it has identified as the "major cancer impact" area.
The utility did not disclose the existence of this school, as required by the California Energy Commission. The utility is currently negotiating a financial benefits package with the same school whose existence it fails to recognize.
Will the FPLs of the world choose to emulate SMUD's efficiency, conservation efforts and "green" philosophy? Will they plant trees and partner with the community to preserve the larger public interest as their priority? Or will they encourage consumption of precious global resources for the sake of their bottom line?
-- Deborah Courtney, Elverta
For all the letters from the 11/17/01 Bee, see
http://www.sacbee.com/content/opinion/story/1183096p-1250710c.html
By Celia Lamb, staff writer, Sacramento Business Journal
(Published December 14, 2001)
Clean Energy Systems Inc., a small Rancho Cordova company with a Space Age clean-energy technology, may soon receive its first big break — a chance to build a 500-kilowatt power plant.
It would be the first fully operational power plant using technology developed by the retired Aerojet engineers who own Clean Energy, and it would give the company an opportunity to prove its technology in the real world, said company president Stephen Doyle.
Clean Energy Systems has completed contract negotiations with the California Energy Commission, which is expected to allocate $2 million to support the project at a Dec. 19 business meeting.
The planned generator would piggyback on a much larger power plant in Antioch owned by Mirant Corp. of Atlanta. Mirant and Air Liquide, a French company specializing in supplying gases for industry and medicine, would partner on the project.
Clean Energy Systems’ technology does not pollute the air. That could make plants using the system easier to locate in California, where smog regulations often delay power plant construction, said Ray Smith, a deputy associate director with the Lawrence Livermore National Laboratory.
The small size of Clean Energy Systems’ generator may also make it useful for building small power plants that provide on-site energy for factories or remote communities, said Lawrence Ruth, a combustion technologies expert with the U.S. Department of Energy’s National Energy Technology Laboratory in Pittsburgh, which has helped fund the company’s research.
“They have to show the system is reliable and can be operated over a long period of time,” Ruth said.
And that’s just what the proposed plant in Antioch is intended to do, Doyle said. The plant is expected to run for at least two years, beginning in the first quarter of 2003.
Wanted — money: Clean Energy Systems also has deal a in the works with an undisclosed Southern California municipality to build and operate a 2-megawatt power plant that would run on methane gas emitted at a landfill, Doyle said. That plant would operate for three to five years, until landfill gas pressures dropped below levels to sustain the plant.
In the long run the company does not want to own and operate power plants. Instead Clean Energy plans to license its power plant technology to other companies, charging royalties for the licenses. The company has about a dozen patents, with more on the way.
The Antioch project and the possible Southern California landfill gas project are the first steps in the company’s move from research and development to a commercial operations mode, Doyle said.
That transition will require money. Since its inception in 1996 the company has spent about $4 million, and it will need $14 million to cover the next three years. The company is soliciting venture-capital and other investment firms. Most of the money is needed to pay for planned expansion to 25 employees from 15.
“One of the miracles that allowed the company to get as far as it has is it was founded by a group of retirees” who worked for stock, Doyle said. If they had demanded cash, the company would have had a $2 million annual payroll and would have gone belly-up in two years.
Powering up: Clean Energy Systems was founded by six men who retired from Aerojet and a seventh who owned a company that manufactured aerospace components. The founders set out to use their knowledge of rocket science to create an efficient power generator that didn’t pollute the air.
The technology they developed incorporates a fuel processor, which purifies natural gas or other fuels, and a generator that mixes pure oxygen with fuel in just the right ratios to heat water into steam for turning turbines.
The steam generator produces so much more energy that it would overheat most turbines if it didn’t include a cooling process. The steam gets heated to 3,000 degrees and then cooled to about 1,000 degrees before it enters a turbine.
“Their combustion system is a step ahead of turbine technology,” said Ruth of the National Energy Technology Laboratory.
The company estimates that it can produce power at costs of 6 to 7 cents per kilowatt-hour. That makes it competitive with wind power and other renewable generation technologies, but not with modern combined-cycle natural gas-fired plants that can produce power at 3 to 4 cents per kilowatt-hour at current natural gas prices.
Eventually new steam turbines may be developed that can handle higher temperatures, bringing Clean Energy Systems’ generator “pretty close” to big combined-cycle natural gas-fired plants, said Smith of the Lawrence Livermore National Laboratory. But he estimates that technology is at least five years away.
Lawrence Livermore has submitted a proposal to the U.S. Department of Energy to build a $20 million-to-$24 million, 5-megawatt power plant at the laboratory using Clean Energy Systems’ technology. The proposal is a scaled down version of an earlier idea for a $70 million, 10-megawatt plant. The laboratory would also study methods of improving steam turbines for use with Clean Energy Systems’ plants.
“They’re going to make a go. I’m convinced of that,” Smith said. “We just want to improve the efficiency.”
Clean Energy Systems has initially proved its technology in a University of California at Davis lab with a 110-kilowatt test system. But that test system runs off bottled methane and oxygen, and has never run for more than 48 minutes at a time, until the bottles run out.
Building for the real world: The Antioch project will require about $4 million to build and operate. If the California Energy Commission contract is approved, the commission would contribute $2 million.
Clean Energy Systems plans to spend $1 million on the project. Mirant has agreed to spend $600,000 on the project, and would provide natural gas in exchange for all the power generated in the new plant.
At full capacity Clean Energy Systems’ plant would produce enough power to meet the needs of about 500 homes, though the power will probably be used in the Mirant plant rather than sent to the grid. The 680-megawatt Mirant plant is more than 1,300 times larger than the planned Clean Energy Systems plant.
Air Liquide has agreed to contribute $500,000 in cash and services, including providing the pure oxygen used by the generator.
Clean Energy Systems’ generator emits no pollutants into the atmosphere. But it does produce one significant byproduct: bottled carbon dioxide.
Scientists suspect that carbon dioxide emissions contribute to global warming, so Clean Energy Systems has developed a way to sequester the gas. But there’s still the problem of what to do with it.
Clean Energy Systems is in discussions with one potential buyer of the carbon dioxide generated by the proposed Antioch plant, Doyle said. He wouldn’t name the interested party. If those discussions don’t result in a deal, the carbon dioxide could be purified to food-grade quality and used by Air Liquide, Doyle said.
The municipality with which Clean Energy Systems is negotiating to build a 2-megawatt landfill-gas-power plant plans to use carbon dioxide produced from that plant for water treatment, Doyle said.
In the long term, a better disposal method is needed. One possibility,
said Smith of Lawrence Livermore, is selling the gas for pumping into oil
fields to improve the flow of oil. About 4 percent of the oil produced
in the United States comes from fields flooded with carbon dioxide, Smith
said. The proposed lab at Lawrence Livermore could test that possibility,
because it’s across the street from an oil field.
By Celia Lamb, staff writer, Sacramento Business Journal
(Published December 14, 2001)
Officials with the city of Roseville and Roseville Electric hope a power plant proposed by an Enron Corp. subsidiary will still get built, even though the energy-trading company has filed for bankruptcy.
In March, the city signed an agreement giving Roseville Energy Development LLC exclusive rights to build a power plant on city land. Roseville Energy Development is an affiliate set up by Enron North America Corp. specifically to develop the plant.
Enron applied to the California Energy Commission for permission to build a 900-megawatt power plant, big enough to serve about 900,000 households. The fate of that application rests with the administrative law judge overseeing Enron’s Chapter 11 bankruptcy reorganization case.
City officials hope the judge will view the city’s agreement to lease the land as a significant asset worth saving or selling, said Roseville Electric spokesman Bernie Fargen. The judge could see the power plant as a poor investment, given the volatility of energy markets in California, and order the company to stop pursuing it. But that’s considered unlikely.
An Enron employee overseeing the project did not return calls requesting comment, but a spokeswoman with the Energy Commission said Enron continues to pursue its application. Enron, based in Houston, has paid a $600,000 first installment of about $2.8 million in impact fees to the city.
“Generally, Enron starts the development process and sells that off to someone else,” said Arthur O’Donnell, editor of the trade publication California Energy Markets. “So you may see that happen sooner rather than later as they shed their assets.”
Two other plants pending: Enron’s power plant proposal isn’t the only one under a cloud in Greater Sacramento. An application by FPL Energy Sacramento Power LLC, a sister company of Florida Power & Light, was suspended by the Energy Commission Sept. 21. FPL wants to build a 560-megawatt plant in Rio Linda.
The commission asked the company for evidence that it can meet air quality regulations, plus more information about issues such as how water will be supplied to the plant and how the plant will connect to transmission lines.
“We’re doing the work to refile the application,” said FPL Energy spokeswoman Carol Clawson. But the company faces some vocal community opposition, and the county Board of Supervisors has yet to decide whether the plant would fit the county’s general plan and a community plan for Rio Linda and Elverta.
One other major power plant has been proposed in Greater Sacramento. The Sacramento Municipal Utility District would like to build a 1,000-megawatt plant in two stages near the former Rancho Seco nuclear plant.
Proponents say SMUD’s proposal should sail through the Energy Commission, since it would be built in an area that was already set up for a power plant. The county Board of Supervisors has already approved the project.
SMUD has lined up air credits to build the first stage of the 500-megawatt plant. But SMUD may have trouble finding credits for the second half.
$50M in payments at risk: Finding a spot to build a power plant in California isn’t easy. What Roseville offers Enron, Fargen said, is a site with a ready supply of cooling water, plus proximity to major transmission lines and natural-gas pipelines.
In March, the city and Enron signed a memorandum of understanding in which the city agreed to lease land next to a wastewater treatment plant being built. The lease would run for 25 years with a five-year renewal option; then Enron would either buy the property or shut the plant.
Though the city has no money invested in the power plant, local governments and Roseville Electric could lose millions of dollars in potential future income if the agreement doesn’t work out.
The memorandum requires the company to pay $1 million a year for 25 years to Roseville Electric, plus another $1 million annually during the same time to Roseville, which would split the money with Placer County and Lincoln, Loomis and Rocklin.
If the memorandum is sold, the buyer would be responsible for meeting those payments.
Enron has already spent “almost all the money they need to get the application to the Energy Commission,” Fargen said.
Enron has another asset connected to Roseville: a contract to sell 50 megawatts of power to Roseville Electric at 4.9 cents per kilowatt-hour. The contract, signed Aug. 20, lasts five years.
“It’s an asset that has a great deal of value that one of their creditors might take,” Fargen said. Since the market price for power is about 3 to 4 cents per kilowatt-hour, Enron likely wouldn’t have trouble finding someone to take the contract.
Why power got cheaper: On Feb. 2, when FPL Energy submitted its Rio Linda application, its reasons seemed obvious. Wholesale electricity prices in California had hit historic highs of up to $1,000 per megawatt in December and January. Power sellers were raking in dough.
Since June, however, wholesale electricity prices have largely stabilized at around $30 to $40 per megawatt.
Gov. Gray Davis has taken credit for bringing power prices in line by authorizing the state Department of Water Resources to sign long-term contracts for the state’s power needs.
But power prices had already begun to drop when the state started its negotiations, said California Energy Markets editor O’Donnell. Natural gas prices dropped to two-year lows. Californians used less electricity. Early snow melts in the Pacific Northwest brought hydroelectric power prices down. Mother Nature gave us a temperate summer. And some new power plants, including a major Calpine Corp. plant in Sutter County, opened.
But FPL Energy is looking at the long-term picture, Clawson said. And it sees a growing state with more demand for juice. “The whole process of siting, permitting and building a power plant takes anywhere from three to six years,” she said. “In energy supply, you’ve got to think ahead.”
This year the Energy Commission has received about 25 proposals for major new power plants. Observers expect applications to tail off next year.
O’Donnell said that he’s heard industry representatives say that one-third
to one-half of the plants proposed in California won’t get built.
By Amy Martinez and Deborah Circelli, Palm Beach Post Staff Writers
Published Sunday, January 13, 2002
Kenneth Lay called Walter Revell about a year and a half ago, asking for help finding his daughter a job in Miami.
Nothing inappropriate about that; the two men have been friends for 25 years. But the call also illustrates a larger relationship -- the intermingling of political power and the power business.
Lay is chairman and chief executive of Houston-based Enron Corp., and Coral Gables businessman Revell is chairman of Gov. Jeb Bush's Florida 2020 Energy Study Commission.
Revell's commission in November recommended making it easier for companies such as Enron to set up shop in the state.
Enron, until recently the world's largest energy trader, wanted to change the power landscape, opening Florida's protected market to itself and other out-of-state firms. Lay and his company, with ties to President Bush and other administration officials, confidently pushed their agenda here and across the country.
The effort led to almost half the nation's states moving away from regulated markets, like Florida's. Enron stood to profit handsomely as states opened themselves to competition, and the Federal Energy Regulatory Commission -- led by former Texas Public Utility Commission Chairman Pat Wood -- pushed for large regional power transmission grids that would spur competition.
But Enron's stunning plunge into bankruptcy in early December, coupled with a federal criminal probe of the company and, before that, the power debacle in California, could have the opposite effect.
"The timing is just not right" for deregulation, said Rep. Kenneth Littlefield, R-Zephyrhills, a member of the House Committee on Utilities who served on the Florida 2020 commission.
"There has not been leadership from the executive branch in pushing the issue," said Sen. Walter "Skip" Campbell, D-Tamarac, chairman of the Regulated Industries Committee. That panel will release a report this week saying Florida needs to get started adding power-generating capacity and letting more players into the market. "The do-nothing approach is not the right approach. Government has to plan."
Liz Hirst, Bush's spokeswoman, said the governor still supports moving forward with competition.
"Obviously, he will work to see if he can get some support from legislative leadership," Hirst said.
Strategy for Florida
Enron had intended to become a major player in Florida.
"Florida was very important in Enron's strategy for natural gas and electricity because it is a very large state for growth opportunity and on the high end of the nation as far as electricity consumed per household," said Mike Bedley, a partner in APEX Power Service Corp., a Fort Lauderdale-based energy consulting firm.
Enron was a major "behind-the-scenes player pushing for deregulation of Florida's electricity," said Holly Binns, clean air advocate for the Florida Public Interest Research Group.
The company had plans to build six plants in four counties, including five in Palm Beach, St. Lucie and Broward counties, generating about 2,000 megawatts of electricity -- the most of any out-of-state energy company and almost one-third of the amount proposed by all non-Florida companies.
Enron operates and is an owner of the state's main natural gas pipeline, a 3,302-mile conduit that brings gas from Texas to Miami. It also planned a natural gas pipeline from the Bahamas to Port Everglades in Broward.
Rick Gonzalez, a West Palm Beach architect hired by Enron to design a power plant in Fort Pierce, said the company spared no expense in a state it considered an ideal market because of its long, hot summers and growing population.
"They were very good at hiring the right people to help them get their projects approved," said Gonzalez, who traveled three times during the past year to Enron's Houston headquarters and billed the company more than $100,000. "If I had to fly to Texas to meet with engineers, that was fine."
But that was before Dec. 2, when Enron, once the nation's seventh-largest company, filed the biggest Chapter 11 bankruptcy petition in U.S. history.
Said Binns of the Florida Public Interest Research Group: "The collapse of Enron has had a very chilling effect on deregulation here in Tallahassee and all over the country."
Lew Hay agrees. Hay, chairman and chief executive of Juno Beach-based FPL Group, the parent company of Florida Power & Light Co., says Enron's demise will put a damper on support for deregulation nationwide, with many states already backing off from previously approved plans.
"Enron is one of the biggest proponents of competition," said Hay, who prefers the status quo in Florida. "They were a large lobbying force. Without their resources, there will be fewer people or support for deregulation. I think a combination of California and Enron has caused states to back off of deregulation. It's going to slow down, if not reverse course."
Stood to gain most
No other company would have benefited more from the push to deregulate Florida's energy market than Enron. In addition to its plan to build plants, Enron's Florida Gas Transmission Line likely would have seen sales increase as dozens of power plants were built in a competitive market.
The 2020 commission's Revell, who considers himself a "personal friend" of the governor's, said he got to know Enron chief Lay when he was an executive with Florida Gas Co. in Winter Park. That company later became Continental Resources Co. Revell served as board chairman of the Florida Chamber of Commerce in 1984 and traveled to Washington with Lay as part of a Florida delegation interested in economic development.
Revell said he has not talked with Lay since Enron filed for Chapter 11 protection.
"We never talked about energy," said Revell, who downplayed Enron's Florida presence as "not a big force. They've not been big in the Florida market."
Revell added that deregulation efforts in Florida should not be tainted by Enron's collapse. "It's an awful corporate failure that had nothing to do with deregulation," he said.
Enron is out of the game.
"A lot of our focus these days is on trying to satisfy the needs of the creditors and increase the value of the estate," said John Ambler, Enron's vice president of international public relations. "While we're interested and still continue to believe deregulation is valuable, we are not in a position to be taking a significant leadership role in those efforts."
Ambler also said the Florida Gas Transmission Line is not being affected by the company's Chapter 11 bankruptcy.
Enron wants to sell other projects, including the 180-megawatt power plant project it's building jointly with the Fort Pierce Utilities Authority.
Michael Green, general manager of Charlotte, N.C.-based Duke Energy's Florida operations and chairman of the Florida Partnership for Affordable Competitive Energy, an industry lobbying group, said it would be a "poor choice" for state legislators to use Enron as a reason not to act.
"Clearly, Enron had some problems, but look at how well the competitive energy market handled things by transitioning to other suppliers," Green said. "No molecules of gas and electrons of energy went undelivered."
Joining Duke in the newly formed PACE group are energy companies from around the country.
Enron is not a member.
amy_martinez@pbpost.com
deborah_circelli@pbpost.com
Calpine drastically cuts new power-plant plans
Humbled by the slump in electricity prices and the ripple effects of the Enron Corp. collapse, high-flying power generator Calpine Corp. put billions of dollars worth of proposed power plants, including several in California, on hold Wednesday.
The leading power plant builder in California, Calpine put into limbo at least 4,800 megawatts of proposed generating capacity in the state - enough to power up to 3.6 million homes - although it will finish every plant already under construction. Calpine executives characterized the decision as a temporary retreat that doesn't lessen the San Jose company's long-term commitment to building new plants.
But with Calpine becoming the latest generator to scale back, some experts and state officials said the slowdown in new projects could bring a repeat of the energy crisis when the economy recovers and demand for electricity resumes growing.
"The power plants are dying like flies out there," said S. David Freeman, chairman of the state's new public power authority. "How dumb can we get? It's pretty clear that shortages mean higher prices. These folks have every incentive in the world to keep us on short rations. As soon as prices come down, they lose interest in building power plants."
Freeman vowed that the state would build new power plants itself if the private sector won't.
Tight supplies sparked a huge run-up in energy costs in 2000 and early 2001, prompting Pacific Gas and Electric Co. to seek bankruptcy protection, causing six days of rolling blackouts and forcing the state to buy billions of dollars worth of power to keep the major utilities going. Gov. Gray Davis ordered a streamlining of the permitting process in an effort to speed up plant construction, and several plants opened.
Now that prices have tumbled and the crisis has eased, the construction explosion is slowing, leading to possible shortages ahead, said Peter Navarro, a business professor at the University of California, Irvine.
"The problem with deregulation is you get boom and bust," he said.
But other experts, noting that California has locked up much of its needed electricity the next few years via long-term supply contracts, said there's relatively little chance of another major shortage anytime soon. Indeed, the state has contracted for so much energy that a California Department of Water Resources study predicted the state will have to dump scads of surplus power on the market at discount prices, costing the state billions of dollars.
Companies like Calpine are merely putting on hold projects that would have made sense only if prices had stayed sky-high, said Severin Borenstein, director of the UC Energy Institute.
"I would have been surprised if these guys had plowed ahead (with construction) - then there would have been a real glut," Borenstein said.
The California Energy Commission, which licenses new plants, will meet with Calpine today.
The commission is concerned because other projects have been put off, including FPL Power's proposed 560-megawatt Rio Linda facility and Mirant Corp.'s 540-megawatt plant in San Francisco. Enron's bankruptcy leaves its Roseville project in limbo.
If too many plants get canceled or delayed, "we could end up back in a market that is constrained," said commission spokeswoman Claudia Chandler.
However, it's not as if construction has come to a halt.
For instance, Calpine said it will finish two major California plants that are already under construction, in Pittsburg and near Bakersfield.
But at Calpine, all projects that haven't yet broken ground will be put on hold. The company will continue obtaining construction permits and other necessary approvals, but then will put those projects on "hot standby" for further review. Construction will proceed only if Calpine can obtain financing and there's enough demand for the electricity, said Calpine Chief Executive Officer Pete Cartwright.
"We're only going to bring plants on when they add value to the company," Cartwright said in a conference call with investment analysts.
One plant in limbo is Calpine's proposed San Jose plant, which hasn't started construction but is "right on the cusp," said company spokesman Bill Highlander. A company source said the plant, which caused a major political dust-up, probably will get built.
Calpine's announcement, which will save the company about $2 billion in capital expenditures this year, represents a significant about-face for the company that exploded onto the energy scene as the father of a new generation of low-cost, high-efficiency power plants.
Last summer, as it opened a desperately needed plant in Sutter County, the company was speaking confidently of its ambitious plan to operate 70,000 megawatts of power in the United States. That would make Calpine probably the world's largest power generator. Calpine currently operates 11,100 megawatts of power.
On Wednesday, he said the company will complete the 27 plants under construction in the United States and Canada, more than doubling the company's output. But another 34 plants - representing another 15,100 megawatts - are being temporarily shelved.
Not only have power prices fallen, but the investment climate for energy has turned cold, thanks largely to the spectacular demise of Enron. Calpine and several other power generators found themselves downgraded to junk-bond status by the Wall Street credit rating agencies.
On Wednesday, Calpine said low power prices also are putting a dent in profits. Cartwright said 2001 earnings, originally forecast at $2 a share, will come in at about $1.95 a share (final results will be announced Jan. 31). Profits in 2002 will probably fall to $1.70 a share, he said.
* * *
The Bee's Dale Kasler can be reached at
(916)321-1066 or dkasler@sacbee.com
[Thanks to Dale Kasler for providing this article in text format]