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July - Duke Energy Employee Advocate

Deregulation - October, 2001

"Those who expect to reap the blessings of freedom must,
like men, undergo the fatigues of supporting it." - Thomas Paine

No More Energy Shortage

Coastal Alliance – Press Release – October 31, 2001

The California Senate has determined that the energy shortage in the state is over. But power producers, such as Duke Energy, continue to claim that a shortage still exists, sometimes using such arguments to try to get around environmental protections in order to speed up approval of power plant projects by regulatory agencies.

Duke is seeking to expand the Morro Bay Power Plant and extend its operational life for up to 50 years, even though evidence shows it would cause severe harm to the marine life of the Morro Bay National Estuary and increase air pollution posing a major health risk to residents in and around Morro Bay. Duke insists it should be given the go-ahead, despite the fact a team of marine scientists and the California Energy Commission staff have discovered that a new plant would kill nearly one million fish, shellfish, larvae and eggs from the Estuary annually. The state Senate on Sept. 14 approved a resolution declaring that "the condition of electric service in California no longer constitutes a sudden and severe energy shortage and that the state of emergency declared by Gov. Gray Davis on January 17, 2001, is at an end." It was authored by Sen. Deborah Bowen, a Democrat of Redondo Beach, who chairs the Senate Energy Committee.

Sen. Jack O'Connell, who represents this area and who has said he supports expansion of the Morro Bay plant because of the energy shortage, voted for the resolution.

The resolution said the energy shortage is over because:

  • Six new power plants have begun operating in the state and 20 others have been approved by the California Energy Commission, representing a total of more than 6,600 additional megawatts for use in California.

  • The Legislature and Gov. Davis have created a state power authority to spend up to $5 billion to pay for new power plants and energy efficiency measures.

  • They have approved over $850 million to expand conservation, energy efficiency and management efforts to cut peak electricity consumption.

  • Consumers have conserved significant amounts of electricity and reduced the statewide demand for energy.

  • As a result of these developments, significant electric service disruptions have been avoided, and electricity prices have stabilized and decreased.

The resolution notes that the state must continue to monitor the energy situation carefully, and "seek all available remedies for unjust and unreasonable prices charged for electricity." (Duke and some other power companies have been sued by public agencies and are under investigation by other state and local authorities for alleged market gouging and manipulation during the so-called energy crisis last year.) However, the resolution declared that "the conditions justifying the declaration of emergency has been addressed to an extent that they no longer constitute extreme peril to the safety of persons and property within the state."

The end of the energy shortage, the construction of new plants and the continuing buildup of energy supplies also cast doubt on the need for expansion of the Morro Bay Power Plant. The Duke project would increase the plant's generating capacity by only 170 megawatts, a tiny fraction of the total state supply that is forecast for 2004 or 2005 when an expanded Morro Bay plant would become operational.

The Coastal Alliance on Plant Expansion is a nonprofit citizens group that opposes Duke's plans to expand the Morro Bay Power Plant because of significant adverse impacts on the Morro Bay National Estuary, as identified by marine scientists hired by regulatory agencies, and because of increased air pollution and greater health risks from the plant. The Alliance posts a wide variety of information on the Duke project on its web site at

Previous Morro Bay article:

The $3,880 Megawatt-Hour

California Power Woes Live On...And On

Dow Jones - by Arden Dale – October 31, 2001

Utility deregulation died officially in California last month after a long illness, but the energy crisis lives on.

It's in the pink of health, and could reach 100 at the rate things are going.

Just in time for Halloween, California officials have another chance to stop dithering and help put things right for energy companies, California's economy and consumers.

First, a brief refresher: the state still owes about $11.3 billion for electricity it bought on behalf of its ailing utilities. It has not come through with a storied $12.5 billion bond issue it's been planning since last spring to help repay its power debt.

The theater of operations has shifted from the state Legislature to the California Public Utilities Commission, where a rate agreement holds the key to possible resolution. Without the agreement or something like it, the bond issue likely won't happen.

Here's where Halloween comes in.

If the CPUC were to do an about-face and approve by Oct. 31 a rate agreement it rejected just three weeks ago, it could prevent technical default of a $4.3 billion bridge loan California secured in June to help buy electricity. Rates on the loan already rose 2% on Oct. 11, amounting to about $230,000 a day in extra costs, and those costs will remain until a rate agreement passes.

Preventing the technical default would be gravy. The real boon would be that the bond issue would move a step closer to happening.

Miracles do happen, and the CPUC could meet the Oct. 31 deadline. Chances are just as good, though, that regulators and politicians will go on with the dickering and disinformation that has prevailed over the past year…

Deregulation Problems with Power Grids

Associated Press – October 6, 2001

N.C., others argue that call to open power lines usurps state function

WASHINGTON -- Several states, including North Carolina, told the Supreme Court the government went too far when it ordered electric utilities to open their power lines to competitors and spurred a movement toward deregulation.

But power marketer Enron argued before the court Wednesday that the Federal Energy Regulatory Commission should have gone further to help companies such as Enron get equal access to power grids.

The justices gave little indication of how they will decide a case that could affect management of the nation's power grids and the future of electricity competition.

The commission's 1996 decision, which required utilities to open transmission lines to competing power merchants, triggered a movement toward wholesale electricity competition.

But utility regulators in North Carolina and eight other states filed suit, arguing the FERC order amounts to a federal agency attempting to regulate retail sales, usurping a state function.

Enron's lawsuit charged FERC violated federal law because it did not require access to transmission lines when utilities continued to keep transmission and retail sales as one operation - as remains the case in many states that have yet to allow competition.

Last year, an appellate court upholding FERC's regulation prompted appeals from Enron and the states.

Deregulation - September 2001