Bay Area Power Plant Owner Fights Its Dim Image With Ad Campaign
After nearly a year of being branded as pirate, gouger and profiteer, a California power plant owner has begun fighting back--on the airwaves.
Mirant Corp. of Atlanta recently launched radio and newspaper ads in the San Francisco Bay Area, where it owns three power plants. The ads remind people that Mirant is investing hundreds of millions in expansions and that its employees “live and shop and send our kids to schools in the same communities we serve.”
Tom Allen, Mirant vice president of external affairs, said Friday that workers have “picked up” on the hostility that many Californians--especially political leaders--have expressed toward power sellers charging record wholesale prices.
Last week, Gov. Gray Davis called private power plant owners “the biggest snakes on the planet.”
Allen said the Mirant ad campaign is designed as a “pat on the back” for the company’s 250 California employees and to familiarize people with its new name.
The company, once known as Southern Energy, bought power plants capable of supplying 3 million homes from Pacific Gas & Electric Co. in April 1999 for $801 million. In January, the company spun off from parent firm Southern Co., which owns several regulated utilities in the Southeast, and changed its name to Mirant.
Like more than a dozen other power plant owners and electricity marketers, Mirant Corp. stands accused by the Federal Energy Regulatory Commission of charging excessive prices in California in January, February and March. The commission has ordered Mirant to justify its prices or refund $3.1 million earned on those sales.
The company is also under investigation by state Atty. Gen. Bill Lockyer for possible civil and criminal violations. On Thursday, Lockyer went to court in San Francisco to compel Mirant and Reliant Energy of Houston to turn over documents relating to their operations in the California market.
Mirant executives on Friday said they were unable to meet a March 19 deadline to do so because of the broad scope of Lockyer’s subpoena. They also noted that Lockyer has not promised to protect proprietary information.
“There’s a tremendous amount of irony here,” said Randy Harrison, chief executive of Mirant’s Western U.S. operations. “We’re accused of collusion. We vigorously deny the allegation. Then we’re told to provide data that, if not kept protected, will let everyone in the market know what we’re doing.”
In other energy developments Friday:
* The looming double whammy of rolling blackouts and electricity rate hikes could cost the California economy as much as $16 billion this summer, slowing economic growth, according to a study by a Northern California coalition of business and government.
The study, more pessimistic than some other recent assessments, said the Silicon Valley and other parts of the nine-county Bay Area will be hit hardest in the state, in part because the region is home to so many technology companies that require uninterrupted power to do business.
“If unsolved, the energy crisis could throw the state into recession and permanently change the perception of the Bay Area as a thriving place to live and work,” said Eugene Leong, executive director of the Assn. of Bay Area Governments, which sponsored the McKinsey & Co. study with the business-oriented Bay Area Council.
Each megawatt-hour of electricity that goes undelivered represents about $16,000 of lost economic output in California, the study estimated. By that measure, the blackouts of March 19-20, totaling about 5,000 megawatts, reduced state output by $75 million to $100 million, the report said.
* State Treasurer Phil Angelides said Pacific Gas & Electric’s bankruptcy filing will not interfere with the sale of a record $12 billion in bonds to finance the state’s electricity purchases.
After weeks of studying whether PG&E;’s move April 6 would derail the state’s bond sale, Angelides’ team of bond lawyers and Wall Street financiers has determined that the bankruptcy filing will not endanger the money from utility rates needed to pay off the bonds.
Under a plan approved by the Legislature and signed into law by Davis, the state is supposed to issue bonds to repay the budget for past electricity purchases--$5.7 billion has been committed since mid-January--and to buy power into the future. The state has been buying electricity for customers of the big investor-owned utilities, as skyrocketing wholesale prices put PG&E; and Southern California Edison billions into debt and many suppliers refused to sell to them.
The bonds are to be paid off by utility ratepayers through a portion of their monthly electric bills. But financial analysts and some lawmakers have expressed concern that a bankruptcy judge could cut into that share of utility rates dedicated to paying off the bonds and use it instead to pay off PG&E;’s creditors.
Lawmakers say they wrote the legislation to protect the state’s interests. After reviewing the legal issues, Angelides said, he has concluded beyond a doubt that California’s authority is not superseded by a federal bankruptcy judge and that the state’s financial plan is not in jeopardy.
That could allay fears on Wall Street that the bond deal is troubled, Angelides said.
* Davis announced that San Diegans will also get a break under his “20/20” conservation plan. The reward program offers PG&E; and Edison customers a 20% rebate on their electricity bills if they cut by 20% the aggregate amount of electricity they consume from June through September this year.
Customers of San Diego Gas & Electric Co. must cut their consumption by only 15% to get the 20% rebate, the governor said, because last summer they conserved an average of 7%.
Unlike Edison and PG&E; customers, who were protected by a retail electricity rate freeze, SDG&E; customers bore the full cost of wholesale price spikes in California’s deregulated market last summer and saw their bills at least double.
*
Times staff writer Nancy Rivera Brooks in Los Angeles contributed to this story.
