To: Glenn Petersen who wrote (420115 ) 6/29/2003 11:19:49 AM From: American Spirit Respond to of 769670 James Baker is also Reliant's lawyer, Bush's lawyer, Carlyle's top gun, king of the lawyer/lobbyists for the energy crisis gang: Reliant Energy and the California Energy Crisis Reliant supplies 5% of California’s total energy needs. It is one of the five companies against which California filed suit in May of last year, alleging unlawful business practices during the California energy crisis that began in the summer of 2000 and lasted well into 2001. California owes Reliant $337 million for power sold to Pacific Gas and Electric and Southern California Edison. Wheatley, in a telephone interview on April 9, said that about 60% of the money is owed for power that Reliant supplied to PG&E, which filed for bankruptcy in April 2001, and the rest is owed for power supplied to SoCalEd. One of the issues that has received a lot of press is that Reliant charged the state $1,900 a megawatt hour for electricity produced by a "peaking plant" in the Santa Barbara area, one of five power plants that Reliant purchased from Southern California Edison in 1998. Wheatley explained that because the plant’s is so inefficient, it is allowed to run only eight days (200 hours) a year, and the company had to pay for emission credits in order to run the plant at all. Given what it cost Reliant to produce energy at the 56 MW Goleta power plant, the $1900 per megawatt hour charge was reasonable, he said. He further explained that Reliant learned a few months after this plant was put into temporary operation that energy was available to California at that time for $200-$300 per megawatt hour, but the state nonetheless accepted the $1900 bid for energy produced by the 50 MW Goleta plant. According to a report prepared by the U.S. Congressional Budget Office, and released in September 2001, the California energy crisis was created by a combination of state deregulation of the industry, increased demand for electricity, California’s inability to supply its own power needs, and price caps. Nonetheless, in March of this year, California’s attorney general sued four companies, including Reliant, alleging unfair business practices and at the end of the month Reliant admitted overscheduling, but the company says it profited only slightly from doing so. Baker Botts is among the law firms that are representing Reliant Energy in the suits and investigations to which Reliant has been subject as a result of the California energy crisis.