Tokyo-based Electric Power Subsidiary partners with AP Solar in 400 MW Texas Solar Project

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Texas Solar Project Sold to CIP

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Industry News

California Water Agency Wants $18 Billion for Power

LCG, Nov. 7, 2001--The California Department of Water Resources, the agency which has been buying electricity on behalf of the state's cash-strapped investor-owned utilities, said yesterday it needs $18 billion to cover emergency power purchases.

At the same time, state Treasurer Phil Angelides said he would meet this week with state regulators in an effort to get them to take necessary action for California to issue $12.5 billion in bonds to pay for some $7 billion in power already purchased and consumed and to back up long term contracts reaching as far as 20 years into the future.

The water agency said the $18 billion it needs would cover $10 billion from revenues to be collected from customers of investor-owned utilities, $7.8 billion from proceeds of advances from the state's general fund, and $160 million from sales to other utilities.

Angelides, in a Santa Monica press conference, said that unless the general fund is repaid, popular programs such as increased aid for education might have to be abandoned.

"This bond issue must get done," Angelides told reporters. He said failure to issue the bonds would cause "monumental" damage to schools and many other essential public services.

California had originally intended to market the bonds in May, and Gov. Gray Davis had at that time "guaranteed" that the general fund would be repaid not later than June 30. The bond issue was delayed several times, with the latest "inviolate" deadline set as October 31. That deadline, like the others, was violated.

Under state law, the California Public Utilities Commission must approve details of the water agency's needs before the bonds can be marketed. The regulators' most recent objection has been that the bond issue would lock the state into paying $43 billion for the long-term power purchases now that market prices for electricity are much less than they were when the contracts were negotiated.

Loretta Lynch, president of the CPUC, yesterday repeated her call to renegotiate the state's long-term power contracts, saying such talks should cover price, length, quantities and even contractual language.

"We have some very good legal arguments. We have some very good practical arguments," she said. "We need to go back to reform these contracts."

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