109th votes to open
Gulf to new drilling

The Senate voted 79-9 on Saturday to allow new offshore oil and gas drilling in the Gulf of Mexico on the heels of Friday's House approval of the legislation.
        The bill went to the White House for President Bush's expected signature.
        Meanwhile, House Democrats vowed to probe oil company subsidies in January.
        Proponents of drilling had wanted to open up a bigger area on the outer continental shelf and rid the bill of language that continues bans in Montana.
        Drilling advocates hope eventually to lift the moratoria that cover 85% of the US coastline.
        They worked hard and successfully as the week ended to allow drilling in an area spanning 8.3 million acres in the east-central Gulf.
        The area south of Florida's Panhandle is expected to yield the largest oil and gas reservoirs in the nation -- 1.2 billion barrels of oil and 5.8 tcf of gas.
        The royalties generated by opened areas will flow into federal and state treasuries, strengthen our defenses and help Gulf Coast states deal with hurricanes and damaged coastal wetlands.
        The percentage of royalties going to the Gulf Coast states is to reach several hundred million a year initially. Estimates put the dollar amount in the billions after 2017 as production and royalty sharing expands.
        The bill represents a "raid" on the federal Treasury, said Sen Ed Markey, D-Mass.
        The bill grants roughly half of the 37% to Louisiana with hefty amounts going to Alabama, Mississippi and Texas.
        Originally published in Restructuring Today on December 11, 2006

Will California allow shopping again?

We think it will.
        This is not the crowd on the PUC in the days of the crisis.
        Don't forget that the chairman is not an ordinary guy.
        He did build the leading energy marketing company in the US now called Constellation NewEnergy. When he sold it the firm was known as NewEnergy.
        The petitioners went in with a broad coalition, the kind of basis that gives the PUC standing to issue a broad rule.
        What about politics?
        The governor was recently reelected with a comfortable majority as a Republican in a Democratic state at a time when the GOP was in trouble nationally.
        Arnold Schwarzenegger is the kind of Republican who wins because he speaks for the middle, appoints lots of Democrats, isn't a religious fringe guy.
        We know the governor wants an open market for power. His website as a candidate the first time around was full of pro-markets stuff.
        But what about the legislature?
        It's dominated by Democrats who liken free markets with Enron and the energy crisis but the request went to the PUC -- not the legislature.
        Getting the California colleges out front with proof of savings makes a big argument for open markets.
        Having the state university, community colleges and the University of California out in front with savings data really helps a lot.
        It's not just big business trying to cut its own deal.
        It's California universities seeking a bigger green-power content than they can get from regular utilities.
        University of California wanted a larger green content that the law required and now has it because it had shopped.
        Originally published in Restructuring Today on December 11, 2006