EXECUTIVE ORDER D-44-01


WHEREAS, on January 17, 2001, I proclaimed a State of Emergency to exist within the State of California due to the energy shortage in the State of California; and

WHEREAS, there is a high probability that the energy shortage will continue to cause rolling blackouts throughout California, threatening the health and safety of California residents, critical services in the State, and vital segments of California's economy; and

WHEREAS, all reasonable efforts must be made to ensure that generating facilities located in California become operational and are operating to ensure an adequate availability of generation during periods of peak demand; and

WHEREAS, the Kern Power Plant in Kern County, owned by the Pacific Gas and Electric Company (PG&E), has not been in operation since 1985; and

WHEREAS, if restored to operation, the Kern Power Plant would provide 180 megawatts of urgently needed power; and

WHEREAS, PG&E has filed a Chapter 11 bankruptcy petition in the United States Bankruptcy Court, and states that it lacks both the funds and the necessary personnel to restore the Kern Power Plant to operation; and

WHEREAS, on August 24, 2000, PG&E entered into an agreement with North American Power Group for the North American Power Group to acquire the Kern Power Plant and return it to operation; and

WHEREAS, the North American Power Group has already invested significant resources in preparing to retool the Kern Power Plant, including completing detailed engineering studies and mobilizing the necessary workforce; and

WHEREAS, the prohibition against the sale of generation assets in Public Utilities Code Section 377, as enacted by AB 6X (Dutra), Chapter 2 of the Statutes of 2001, was not intended to apply to non-operational facilities; and

WHEREAS, the California Public Utilities Commission (PUC) nevertheless concluded that Public Utilities Code Section 377 prohibits PG&E from transferring its Kern Power Plant to the North American Power Group for reactivation and renewed operation; and

WHEREAS, the Office of Ratepayer Advocates, an independent agency charged with protecting the interests of California ratepayers, has concluded the North American Power Group is in a superior position to quickly, effectively and safely retool the Kern Power Plant; and

WHEREAS, failure to transfer the Kern Power Plant to the North American Power Group for operation will prevent, hinder, and delay mitigation of the effects of the energy shortage emergency; and

WHEREAS, the energy shortage emergency requires extraordinary measures beyond the authority of the PUC; and

WHEREAS, the Legislative Counsel has opined that Public Utilities Code Section 377 may be suspended pursuant to the California Emergency Services Act if necessary to mitigate the effects of the energy shortage emergency;

NOW, THEREFORE, I, GRAY DAVIS
, Governor of the State of California, by virtue of the power and authority vested in me by the Constitution and the statutes of the State of California, including the California Emergency Services Act, Government Code Section 8550 et seq., do hereby issue this order to become effective immediately:

IT IS ORDERD
that Public Utilities Code Section 377 is hereby suspended to the extent that it would prohibit completion of the pending transfer of PG&E's Kern Power Plant to the North American Power Group.

IT IS FURTHER ORDERED
that Public Utilities Code Section 377 is so suspended upon the condition that the Kern Power Plant be transferred subject to the requirement that the North America Power Group enter into one or more contracts to sell power generated by the facility and ancillary services to the California Department of Water Resources or any other credit-worthy California entity for distribution to California rate-payers on a cost-of-service basis for a term of not less than five years.

IT IS FURTHER ORDERED
that the parties to this transfer shall obtain any and all necessary court approvals that may apply, including but not limited to, approval by the Bankruptcy Court presiding over the PG&E proceeding.

IT IS FURTHER ORDERED
that any order or decision of the PUC prohibiting or restricting PG&E from transferring its Kern Power Plant under the above conditions is hereby suspended to the extent necessary to effectuate this transfer. The PUC shall retain all other jurisdiction over the transfer.

The activities herein are authorized pursuant to the California Emergency Services Act, Government Code Section 8550 et seq., as necessary to mitigate the effects of the energy shortage emergency.

I FURTHER DIRECT
that, as soon as hereafter possible, this order be filed in the Office of the Secretary of State and that widespread publicity and notice be given to this order.