From: ken@kdscommunications.com
To: sgovenar@govadv.com, mark.palmer@enron.com, ban.sharma@enron.com, david.leboe@enron.com, mary.schoen@enron.com, eletke@enron.com, jennifer.thome@enron.com, miyung.buster@enron.com, janel.guerrero@enron.com, rfrank@enron.com, leslie.lawner@enron.com, harry.kingerski@enron.com, kdenne@enron.com, steven.j.kean@enron.com, acomnes@enron.com, james.d.steffes@enron.com, rshapiro@enron.com, michael.mcdonald@enron.com, paul.kaufman@enron.com, smara@enron.com, jdasovic@enron.com, bhansen@lhom.com, mday@gmssr.com, hgovenar@govadv.com
Date: 2001-07-05 14:13:00+00:00
Subject: Lt. Gov. Bustamante introduces two new "whistleblowers"

California Lt. Gov. Cruz Bustamante and Assemblymember Barbara  Matthews 
(D-Tracy/Stockton area), held a press conference today to "introduce"  two 
new "whistleblowers" from Duke Energy's South Bay plant.? Bustamante  and 
Matthews have filed a class action suit against out of state energy  
companies.
?
The two employees, E. Robert Edwards (who spent 22 years at  the plant as an 
electrician) and Richard J. Connors (21 years, started as a  laborer and rose 
to auxillary operator), said they had little new to offer but  were there to 
back up the testimony of the three former plant employees who  testified 
before Sen. Dunn's committee.? Among their claims were that the  plant did 
not run at its potential capacity during periods of rolling blackouts,  that 
part supplies were reduced or removed to slow maintenance, and even that  the 
emphasis on safety was reduced.? 
?
Edwards said that?the?225 MW Unit 4 was kept offline  during a period of 
rolling blackouts.? He also said that Units 1 and 2 were  run at 100 MW 
instead of their 150 MW capacity.
?
Connors noted that units were taken offline on weekends, and  that employees 
"dreaded" Sunday night-Monday morning shifts because "they would  have to run 
around" to bring units on line.? A Duke spokesman said after  the press 
conference that they do shut down some of the units on weekends  because the 
state doesn't need the power and the cost of production is higher  than the 
market price.
?
The employees also claimed that one turbine which uses liquid  fuel was used 
more than they ever remember in place of steam turbines.?  Connors said the 
15 MW generated through the use of jet fuel, oil, etc. could  have easily 
been produced by making adjustments to one of the operating steam  turbines.
?
Ray Boucher, the attorney on the case, said the alleged  actions could 
violate anti-trust laws.? He claimed that documents say Duke  bought the 
South Bay plant because they knew it would enable them to exercise  market 
power.
?
Bustamante dismissed the ISO's confirmation that it had  ordered the plant 
to?ramp?up and down during Jan. 16-18, the period  discussed by the three 
previous whistleblowers.? He said that Duke's  withholding of electricity and 
bidding practices had affected how the ISO had  been forced to manage power, 
and that it is essential to examine bidding records  during that period.
?
Boucher said even though the state is looking at $9 billion in  alleged 
overcharges, the class action suit could ask for more.? "I think it  goes 
deeper than that (the $9 billion)," he said.
?
Bustamante made two incorrect statements during the press  conference.? He 
tried to bolster the credibility of Connors and Edwards by  saying that they 
had been kept on the job for two years after the plant's  takeover by Duke, 
which shows their value.? He was reminded that AB 1890  required keeping 
existing employees for?two years.? (Connors said he  was offered employment 
by Duke but turned them down; Edwards indicated he took  an enhanced 
severance package.)
?
The second was in regard to a claim by one of the former  employees that he 
had been told that the spare parts supply had been reduced in  order to lower 
"inventory taxes."? Bustamante made the comment, "We don't  have an inventory 
tax."? It's true that California no longer taxes  inventory (in retail 
stores, for example), but counties do charge an ad valorem  tax on on-site 
business property.
?
I sat a couple of seats away from Tom Williarms, spokesman for  Duke, 
who?made under-the-breath comments?through most of the press  conference such 
as "That's so wrong."? Following the press conference, he  held an 
availability in the hallway.? He said that there was a fundamental  
difference in operation the employees didn't understand:? The South Bay  
plant now serves the ISO market, while it used to serve a targeted southern  
California market under SDG&E.? Williams also claimed the plant was  under 
severe environmental constraints for NOx that limited its available run  time.
?
Duke, he added, did not want to charge the high prices -- over  $3,000/MWh 
--?it did but included an 80% credit premium because the  utilities were not 
creditworthy.??To date, he said,?it has only  received 1.8 cents on the 
dollar.??Williams said Duke?tried to  sell the power to DWR instead at a much 
lower?rate, but was  refused.?Duke has since refunded some money, Williams  
said,?and?has offered to re-bill at FERC's price-mitigation  rate.