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Reliant Energy Makes ''Good Faith Commitment'' to Keep Power Prices From Emergency Peaking Units Low.

Business Editors


Company Continues to Work with Air Quality

Control Boards to Lift Restrictions on Units

Reliant Energy announced today it will lower the price of its power bids from emergency limited run time peaking units that have environmental permit operating restrictions despite concerns that the state will deplete the available power of these plants too soon.

The company initiated this move in anticipation that local air quality control boards will lift restrictions that hamper supply and cause prices to rise.

"Reliant has recently been sharply criticized for bids from these plants. To show we are committed to working with all parties, we are voluntarily reducing prices in the hopes that all the decision makers in California understand the need to lower restrictions during times of emergencies," Joe Bob Perkins, president and chief operating officer of Reliant Energy Wholesale Group said. "In essence, we are doing exactly what Governor Gray Davis has suggested. But if restrictions are not lowered, we will run out of power from these units very quickly."

In letters sent to the South Coast Air Quality Management District, the Santa Barbara County Air Pollution Control District and the Ventura County Air Pollution Control District, the company resubmitted their request for an extension on the run time limits of its emergency peaking units. Extensions would reduce the price of bids associated with these units from $1500 - $1900 per megawatt hour to $150 to $250 per megawatt hour. In addition, they would help increase the available supply of power during power emergencies.

Currently, these emergency peaking units are allowed to run for only a few days per year. As a result, Reliant Energy has purposely bid the power from these units at high prices in order to discourage their premature use and to help ensure availability in emergencies - specifically stage three emergencies. Reliant has likened those plants to limited canteens of water on a long trek across the desert that should only be used in times of dire thirst.

If the air quality control boards allow Reliant Energy to operate these plants without penalty during emergency times, the need to "ration" the power would be eliminated, lowering prices and increasing supply. No matter what, Reliant Energy intends to lower the prices of the megawatts produced at this plant, in hopes that restrictions will be raised. Recent discussions and the boards' actions with other companies are encouraging. Still, if the air quality boards do not lift restrictions, this power, at the lower price, will be exhausted quickly and will be unavailable for most of the summer.

"It is critical that that all parties focus on the root of the problem in California - the lack of supply of power. It is astonishing that many decision makers continue to take the focus off of supply in the name of political finger pointing. As a result, many Californians still do not believe there is a serious supply problem," Perkins said. "These Reliant efforts are an attempt to increase supply - another step in our commitment to find solutions that are fair for all parties and to do what it takes to keep the lights on in California."

The units affected by this commitment include units at Reliant Energy's Mandalay, Etiwanda, and Ellwood facilities.
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Publication:Business Wire
Date:May 24, 2001
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