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California Timeline
1995
The California Public Utility Commission opens the door to competition.
After declaring the long-standing system of energy regulation in California "fragmented, outdated, arcane and unjustifiably complex," the California Public Utility Commission (CPUC), which sets consumer energy rates, votes in December 1995 to open the state's electricity industry to competition.


September 23, 1996Governor Pete Wilson signs deregulation legislation.
After passing both houses of the legislature with no opposition, Republican Governor Pete Wilson signs energy deregulation legislation. According to the Los Angeles Times, the three major privately held utility companies -- Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric -- spent $4.3 million on lobbyists and $1 million on political campaigns in their efforts to encourage deregulation.

The legislation requires the utilities to transfer operational control of their transmission lines to an independent agency, known as the Independent System Operator (ISO). It also creates incentives for the utilities to sell off their generating plants to private companies. Instead of the utilities setting rates regulated by the state, the legislation creates the California Power Exchange, a private nonprofit organization to set prices at auction.


1998Deregulation legislation takes effect.
As the deregulation bill takes effect, utilities begin taking steps to divest themselves of power generation plants. Rates are capped for consumers until the utilities complete that task, which is expected to occur in 2002.


Summer 1999San Diego Gas & Electric lifts consumer price caps.
Having divested its generation plants earlier than expected, San Diego Gas & Electric becomes the first utility to lift the consumer price cap. Within a year, as wholesale power costs soar, consumers see their electricity bills triple.


May 22, 2000California's electricity supply crisis begins.
On an extremely hot day, the California Independent System Operator (ISO), which manages the California power grid, declares the first Stage 2 power alert when heavy usage contributes to power reserves dropping to 5 percent.


June 14, 2000California suffers its largest planned blackout since World War II.
On a day when temperatures in San Francisco reach 103 degrees, a series of localized, rolling blackouts affect 97,000 Pacific, Gas & Electric consumers in the Bay Area. The California ISO orders the cuts because supplies are low due to the closure of several plants for maintenance purposes. The rolling blackouts are declared in hopes of avoiding a major statewide, uncontrolled blackout.


August 2, 2000Governor Davis charges price manipulation on the electricity market.
After a report by the CPUC finds faults with deregulation and warns of new increases in the cost of power, Governor Gray Davis calls for an investigation into "possible price manipulation in the wholesale electricity marketplace." State Attorney General Bill Lockyer announces his office is looking into price spikes in San Diego as part of a broad probe into the state's deregulation problems.


December 7, 2000California faces unprecedented energy alert.
Suffering from low supply and idled power plants, the California ISO declares the first statewide Stage 3 power alert, meaning power reserves had dipped below 3 percent. Although a Stage 3 alert authorizes the ISO to declare rolling blackouts, they are avoided when the state temporarily halts two large state and federal water pumps to conserve electricity.


December 13, 2000Energy Secretary Bill Richardson intervenes to avoid blackouts.
With California facing its largest shortfall of electric power ever, U.S. Energy Secretary Bill Richardson issues a rare emergency order for out-of-state power suppliers to sell electricity to California at the standard "just and reasonable" rates. The generators had been refusing to sell to California because they feared they wouldn't be paid by the state's cash-strapped utilities.


December 15, 2000Federal regulators reject wholesale rate cap for California.
The Federal Energy Regulatory Commission (FERC) issues an order encouraging the utilities to enter into long-term contracts with power generators in order to avoid paying the high wholesale prices on the California Power Exchange. The order approves a flexible rate cap plan of $150 per megawatt-hour, but allows the utilities to charge more if they can prove a higher price is warranted. The plan is criticized by California consumer groups and Governor Gray Davis, who had asked the FERC to implement rate caps on wholesale electric power. On this date California is paying wholesale rate prices of over $1400 per megawatt, as compared to the average price of $45 per megawatt one year earlier.


December 26, 2000Southern California Edison sues FERC.
Charging that the agency failed to ensure that wholesale electricity is sold at reasonable rates, Southern California Edison sues FERC. On January 2, 2001, Governor Davis files a "friend of the court" brief joining Southern California Edison's lawsuit. FERC lawyers criticize the Southern California Edison lawsuit, writing that the agency should not be held responsible for the utility's "continued reliance on a defective purchasing method."


January 4, 2001California regulators approve emergency rate hikes.
The CPUC unanimously approves temporary emergency rate hikes of 7 percent to 15 percent for customers of Southern California Edison and Pacific Gas & Electric. The companies argued before the commission that they were in danger of bankruptcy because they could not pass on rising wholesale rates to consumers protected by rate caps.


January 16, 2001Utilities move closer to bankrupcy.
Southern California Edison announces it will not be able to pay $596 million it owes creditors because it has run out of cash. San Francisco Chronicle reports that Pacific Gas & Electric is also close to defaulting on bill payments. The credit ratings of both utilities are downgraded to low junk status.


January 17-18, 2001California suffers rolling blackouts.
The California ISO orders rolling blackouts for two days in a row, affecting several hundred thousand consumers in northern and central California. Governor Davis signs an emergency order allowing the state Department of Water Resources (DWR) to buy power as part of a plan to stave off Southern California Edison and Pacific Gas & Electric bankruptcy, as well as further blackouts. On January 19, 2001, Davis signs emergency legislation directing the DWR to spend up to $400 million of taxpayer money to buy power for Southern California Edison and Pacific Gas & Electric. The $400 million is only expected to last for a few days.


January 23, 2001Energy Secretary Spencer Abraham extends emergency order.
Stating that this is the last time he will grant an extension, the new Bush administration Secretary of Energy, Spencer Abraham, extends for two more weeks Bill Richardson's emergency order directing power wholesalers to sell to California.


February 1, 2001State approves legislation to spend $10 billion on power.
By a thin margin, the California legislature approves a $10 billion power-buying plan in an attempt to avoid further blackouts and stave off the bankruptcy of Southern California Edison and Pacific Gas & Electric. Under the plan, the state agrees to sign long-term contracts with generators at prices lower than those on the open market. It is estimated that the state has been spending between $40 and $50 million per day buying electricity on the spot market.


February 6, 2001Bush allows emergency order to expire.
As he had previously indicated, the Bush administration announces it would not renew the federal emergency order requiring wholesale generators to sell power to California. Hours before the order is set to expire, U.S. District Judge Frank Damrell in Sacramento granted a temporary restraining order, forcing major power wholesaler Reliant Energy to continue selling to California. Two other wholesalers, AES Pacific and Dynegy Power announced that they would also continue to sell to California.


February 16, 2001Davis proposes buying transmission lines.
In a further attempt to avoid bankruptcy for the major utilities, Governor Davis proposes a plan to buy their transmission lines. On February 23, Davis announces that he has reached an "agreement in principle" with Southern California Edison to buy its transmission lines for $2.7 billion, while Southern California Edison agrees to produce inexpensive power to sell to the state for the next 10 years. However, Davis does not reach a deal with Pacific Gas & Electric or San Diego Gas & Electric.


March 1, 2001California ISO files request for refunds with FERC.
Alleging that power generators overcharged by $6.2 billion for electricity sold in California during the year 2000, the California ISO files a report with FERC asking them to investigate.


March 9, 2001FERC orders refunds.
In response to California's request to investigate possible overcharges, FERC issues an order to 13 generating companies to either refund $69 million to California utilities or provide justification for prices above the hypothetical threshold of $273 per megawatt-hour during peak hours in January 2001. The order stated that three wholesalers -- Dynegy, Duke Energy, and Reliant Energy -- made most of the questionable sales.


March 16, 2001FERC orders additional refunds.
Citing over 11,000 sales transactions from February 2001 that exceeded a threshold of $430 per megawatt-hour, FERC orders six companies to either refund $55 million to the California utilities or provide justification for high prices. The companies named by FERC are: Reliant Energy, Dynegy, Duke Energy, Williams Energy Services, Mirant, and Portland General Electric.


March 16, 2001Bush administration opposed to price caps.
In testimony before the Senate Energy and Natural Resources Committee, Energy Secretary Spencer Abraham reiterates the Bush administration's opposition to price caps on wholesale electricity prices. He states, "I don't think that we should impose ... the kinds of price controls that will make the (gulf) between supply and demand worse. And that's exactly what I think will happen."


March 19-20, 2001California suffers first statewide rolling blackouts.
The California ISO orders the first statewide rolling blackouts after the unexpected closures of over half of the state's alternative-power generators. Over a two-day period, the blackouts, which extend to southern California for the first time, affect over 1.5 million consumers.


March 27, 2001The state approves record rate hikes.
The CPUC unanimously approves a rate increase that would average 40 percent for Southern California Edison and Pacific Gas & Electric customers in an attempt to help reduce the disparity between the skyrocketing wholesale rates and the lower rates paid by consumers. Governor Gray Davis called the action "premature."


April 5, 2001Appeals court blocks federal order.
A federal appeals court blocks the order that directed Reliant Energy to sell to California while it decides the case.


April 5, 2001Governor Davis proposes a tiered rate increase.
In a statewide address, Governor Davis proposes a consumer rate increase slightly smaller than the one advocated by the CPUC that would average 37 percent. Under his plan, he would give the utility companies a share of the rate increases to help relieve the debt they'd incurred since the crisis began. The utilities say Davis' plan is not viable and that the amount of money he's proposing is too small to save them. They want help for past debt, while Davis would allocate state funds to spend on current and future power needs.


April 6, 2001Pacific Gas & Electric files for bankruptcy.
Announcing that it is $8.9 billion in debt, Pacific Gas & Electric files for Chapter 11 protection under bankruptcy laws one day after Davis' proposal. The utility, which serves more than one out of every three Californians, claimed that regulatory and political efforts to save it had failed as wholesale prices soared.


April 10, 2001Governor Davis reiterates request for price caps
In a letter to FERC Chairman Curt Hebert, Davis criticizes FERC for refusing to institute wholesale price caps, and says that although he applauds the FERC's order that the power wholesalers refund the California utilities for overcharging, "these refunds, if ultimately made, represent a tiny fraction ... of the overpayments made in a wildly dysfunctional market."


April 25, 2001FERC issues order for limited price caps.
Responding to growing political pressure, FERC announces it will allow a cap on wholesale prices only during Stage 1 or higher power emergencies when statewide power reserves fall below 7 percent. The plan is criticized roundly from all sides: Market advocates are disappointed with any price caps, while California officials argue that the order only covers periods when power is highly scarce. To encourage operating efficiency, the order states the price caps will be estimated on the highest operating costs of the least efficient generating plants in the state.


May 15, 2001FERC begins hearings on allegations of price fixing.

More on the El Paso case.
FERC begins to hear charges of price fixing filed against El Paso by the CPUC and Southern California Edison. El Paso, which owns the largest pipeline serving Southern California, is accused of withholding capacity to drive up natural gas prices. The high price of natural gas has contributed to soaring prices for electricity generated by gas-fired plants, and California officials estimate the manipulation has added $3.7 billion to the costs of the energy crisis there. FERC plans to announce its findings on June 30, 2001.


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