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Feather River Bulletin
Quincy, California
April 11, 2001     Feather River Bulletin
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April 11, 2001

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6A Wednesday, April 11,2001 Utility News "l River I Feather I By Sam Williams Staff Wnter A contract revision request- ed by California utility giant Pacific Gas and Electric could result in higher electric rates for all Lassen County resi- dents, regardless of their pow- er supplier, if the revision is approved by the Federal Ener- gy Regulatory Commission. Depending on the FERC's decision, Lassen County resi- dents could face higher rates in about 60 days. On March 28, PG&E asked FERC to allow the utility com- pany to revise its contract with the Western Area Power Administration to reflect the increased price it now pays for the electrical power it sells to WAPA. The Lassen Municipal Utili- ty District and the Plumas- Sierra Rural Electric Coopera- tive both receive low-cost power from WAPA. LMUD has a three-megawatt alloca- tion of WAPA power, about 10 percent of its peak power needs. Plumas-Sierra obtains most of its power from WAPA. Bob Marshall, Plumas-Sier- ra's general manager fumed about PG&E's titling. "They should be called Pa- cific Greed and Extortion, and you can quote me on that," Marshall said. Marshall characterized PG&E's f'tling "fundamentally unfair in key areas" and "a radical change" and, in his opinion, the utility giant should be required to honor a 35-year contract to sell WAPA power at 85 percent of its cost. "Until November of last year we could have bought reasonably-priced long-term firm power,"' Marshall said. "Instead they are doing this at the height of the highest pow- er prices in history. To call it fundamentally unfair doesn't even begin to do it justice. I've heard it described this way. If PG&E can walk on this con- tract, then no long-term wholesale power contract is safe in the entire, nation." Marshall said Plumas-Sier- ra has made long-term agree- ments to provide its cus- tomers with "a soft landing" when WAPA's contract with PG&E expired in 2004. He said power companies can plan for changes which are two or three years down the road, but they can't respond to changes which come this quickly. Marshall said PG&E should bear the responsibility for the state's electrical crisis. "PG&E is to blame for the entire California disaster," Marshall said. "When they were told they had to buy for their retail customers from the wholesale power ex- change, that is the spot mar- ket, hour by hour. PG&E had the ability to go to a financial transaction and buy insur- ance basically. They didn't. "Now they're going bank- rupt. Through their misman- agement others must suffer and rates are going up. PG&E knew all along at every phase of deregulation they had this long-term obligation to meet the power supply of Western's customers. "But they chose instead to sell their plants on the open market and take the money and give it to their parent cor- poration. That was their choice, and the parent corpo- ration should not be relieved of the obligation to support Western under the formula they agreed to and have~ been working under for 30 years. "I think PG&E is vile for do- ing this. This is the lowest move, and please quote me here. If the people doubt what PG&E can do, they should go rent Erin Brockowich (the movie for which Julia Roberts recently won the Acadamy Corner Bob Marshall PSREC General Manager Award for best actress)... "They're trying to get $3 bil- lion from Western's cus- tomers statewide across the next four years. They lost their money on bad bets. Why are they making Western's customers pay it? The stock- holders should clean house at PG&E and stick to their oblig- ations." Don Battles, LMUD's inter- im general manager, John Baxter, LMUD's outgoing gen- eral manager, and Frank Cady, LMUD's general coun- sel were unavailable to com- ment Friday afternoon for this story. But according to a press re- lease issued Thursday by LMUD regarding the PG&E filing, Battles said, "LMUD has a contract to purchase three megawatts of power from Western that will re- main in effect through 2005. The Western purchase com- prises only about 10 percent of LMUD's power needs. The current price for that power is about 2 cents per kilowatt- hour." LMUD officials "will join with other wholesale cus- tomers of the Western Area Power Administration in op- E-mall * Internet • E-commerce • Web Hosting 284-1515 or toll free (888) 219-1954 of Main & Pine streets • Greenville • *Limited offer- restrictions apply. " IIIII '1 -- ' I III II II -- -- ::IDIP:3PZID sites wi posing PG&E's attempt to re- view its contract with West- ern," according to the release. LMUD and other Western wholesale customers have un- til April 18 to file affzdavits op- posing the rate increase and detailing the impacts it could cause. The new rates would go into effect on April 1, according to PG&E's request even though the FERC decision may not be made for 60 days. According to Marshall, if FERC grants PG&E's request, the new wholesale power price WAPA would pay PG&E could be about eight cents per kilowatt hour. In an interview last week, prior to PG&E's filling, Battles discussed the possibilities with the Times. "We're going to have to wait and see how that (the filing by PG&E) plays out," Battles said. "If it plays out in PG&E's favor, then yes, it will in- crease rates. Part of the power we're buying from Redding is GOOD FRIDAY APRIL 13 Greenville 151 ~ A// route picku~ wi//be on regu/ar days Sites will reopen Monday, April 16th. River " , ._._.__ (A W, ANA , ,,,ENT co e,, IN CONCERT 5m mmemm April 26-27 Spring into Midweek! hma, y Tram R tm • Namd o~ d& t~ lOc~as in ~ica~ you a~ "Mm l. ty To CASINO RF.SORT ° REdO a Western allocation. I can't tell you at this time what the impacts are going to be. All I can tell you is somewhere down the line there will be an impact and it's going to de- pend on what FERC decides. Until Western can assess the impacts (of FERC's decision), we can't know." PG&E has asked the FERC to revise the contract that reg- ulates the wholesale rate it charges WAPA to reflect the higher cost it pays for power on the open market. According to the terms of the original contract, inked in 1967, long before the deregula- tion of California's electrical industry, WAPA sold its hy- droelectric power generated during the summer months to PG&E at favorable rates and PG&E sold power generated at its fossil fuel plants during the winter months to WAPA at fa- vorable rates when WAPA's hy~Iroelectric plants were not producing power. The con- tract expires in 2004. Historically, the arrange- ment served both companies well, allowing PG&E to serve its customers with power dur- ing the summer's peaks and allowing WAPA to provide low-cost power to its cus- tomers year round, even when its hydroelectric plants were not generating electricity. According to a letter from PG&E to David P. Boegers, secretary of the FERC, "The rates proposed by PG&E...are just and reasonable because they: • Appropriately assign the costs to the beneficiaries of the services, namely Western and Western's customers; • Reflect establishment of LAST a k -~i g Edit m r et-based pricinga spl gy procurement, th~y B( in~ discriminatory r~ted • Do not result in a~ty A, sive recovery to PG&~ St~ • Are consistent ~ a s' term of Contract 294~sor PG&E wrote tha~ hi~ April 1, 1998, throu~sign 2000, the accrued costhst w tial associated wi5th (," 2948A load shaping~ch w was approximately ~as a lion. PG&E estimateStairm~ total could increase ~ of tl ditional $1.2 billion {/ira by the termination~s m tract 2948A on ~ibut 2004...From April 19~." 2000 the accrued scl~k cil Coordinator costs a~ns tc with Western's retail,~ approximately $77.9 and, at current rates,~_~ mated to exceed $191.~ before the terminatia~ tract 2948A." ~ According to PG~ E0~t( PA's power, genera~t joi droelectric plants a~o be the Central Valley l~t w] not as marketable ahg is because it is produ~ ct cord with CVP waterkt's ments, not custo~l hin mand." ~ by PG&E said the po~Sitiol to WAPA under the~r/C~ tract was generated ~s Ap sil-fuel plants, many $ok al were sold under dere~ Per "The effects of ~edr amendments:" the~te { wrote to Western, dollar for "'-Ick costs associated wit~! ye~ purchases and con t~Y go flect current PG&E~as Cc requirements." ast si tn the ffme . offk in t SLIPPER a res PRESENTA3 " 7:00 p.n . 8:15 Southern Baptist 241 Wolf Creek Rd. (Setzer Rd.) Everyone is invited!. 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