http://dailynews.yahoo.com/h/nm/20010517/pl/utilities_california_reliant_dc_1.html

Calif. Gov. Says Could Seize Reliant Power Plants

HOUSTON (Reuters) - California Gov. Gray Davis (news - web sites) put Reliant Energy Inc. directly in his gunsights on Thursday, singling out the generator as obstructionist while he raised the threat of power plant seizures this summer.

Davis publicly threatened to sign a windfall profits tax bill, commandeer electricity from generating plants or seize the plants themselves if he does not get cooperation from Reliant and other generators in coping with the coming summer power crunch.

He warned in a newspaper interview published on Thursday that the behavior of Reliant and other generators this summer -- when the state's power crisis is expected to peak with a projected 260 hours of rolling blackouts -- will determine the steps he takes.

`I've made clear to the generators that they can influence my decision,'' Davis told the Los Angeles Times. He drew a bead on Houston-based Reliant.`They just want to bleed us dry. I am not saying they are unique in that capacity. But they are uniquely obstructionist,' he said.

Reliant, in a statement later on Thursday said it saw Davis' accusations as ``politically motivated attempts to demonize Reliant Energy as an outsider responsible for causing the state's energy crisis.''Reliant denied the accusations as rhetoric and said they have ''fostered an atmosphere of distrust and uncertainty that have further destabilized the market.'' It said it provided Davis' office with an outline for a series of emergency measures earlier this week and is still waiting on a response.

Reliant set up a conference call for Friday.

`That's basically a specious charge by the governor,'' Reliant spokesman Richard Wheatley said of the obstructionist label.Wheatley said Reliant has had repeated negotiations with California that have gone nowhere, and that solutions it has offered -- such as a load-curtailment program offered last week -- have been rejected. A standing offer to provide power generation for $20 a megawatt-hour plus the cost of natural gas has gone untouched since January, Wheatley said.

RELIANT WON'T FORGIVE POWER DEBTS

Reliant and the governor's office agreed on one point: that Reliant's stance on recouping $337 million it is owed for power sold in California was a major factor in drawing the governor's wrath.``We were probably the only company who said on the record that we would not be willing to take anything less than 100 cents on the dollar for the power that we sold in the past to the state,'' Wheatley said.

Davis spokesman Steve Maviglio said Reliant drew special attention from the governor because of their intransigence and unwillingness to compromise.`They're the only generator that has refused to talk at all about taking a haircut on some of their bad debt,'' Maviglio said. ''Just about every other company said they would be willing to negotiate on their back debt.''

Davis was also troubled by Reliant's refusal to consider price caps, a move that The Williams Cos. is alone among generators in supporting. Williams CEO Keith Bailey last month wrote that he would consider temporary price caps to help California survive the summer.

Reliant's ultimately successful federal court fight against an order from the California Independent System Operator to provide power without payment guarantees was another strike against them, Maviglio said.

The governor and other California politicians have been unceasing in their name-calling and criticism of power generators, whose tenfold increases in prices over the past year have fueled California's power and credit crisis. Davis has called the generators, many of whom are based in Texas, ``the biggest snakes on Planet Earth.''

Davis' first barrage against Reliant came last week when he broke a confidentiality agreement during a press conference to name them as the seller of $1,900 per megawatt-hour electricity. California paid the rate, about five times current market prices, to avert blackouts, he said.

Reliant, which got into the California market when it bought five power plants in southern California in 1998 for $292 million, reported its first-quarter energy sales in 2001 increased 171 percent over a year ago -- producing income of $216 million as compared to a loss of $22 million for the same period last year. Reliant has 3,800 megawatts of generating capacity in California.

-- Swissrose (cellier3@mindspring.com), May 17, 2001