 The DWR is now widely perceived in energy circles as 
a pushover. 
'NO LEVERAGE IN THE MARKET' 
This does not sit well with DWR workers, who insist they are doing the best 
they can under highly difficult conditions. 
"We have done a good job considering that we have no leverage in the market, 
" said Viju Patel, executive manager of the DWR's power systems department. 
"We are dealing with very aggressive traders, and they have the advantage. 
It's a seller's market." 
This is new for the DWR, which oversees the state's water assets -- 
aqueducts, dams, irrigation -- and until now has confined its power buying 
largely to long-term contracts needed to keep pumps operating during 
electricity shortfalls. 
That changed in December when the Independent System Operator, manager of 
California's power network, contacted the department during a shortage and 
asked the DWR to buy about $20 million worth of juice to help avert 
blackouts. 
Subsequent purchases placed the DWR almost $43 million in the hole. It has 
yet to recoup its costs from the ISO and the utilities that ultimately used 
the power for customers -- and which subsequently have defaulted on paying 
their power bills. 
"We made that deal only on a handshake," said Hannigan, the DWR's director. 
"But we couldn't say no, could we?" 
As California's troubles worsened, and as Pacific Gas and Electric Co. and 
Southern California Edison grew increasingly unable to meet customer demand, 
the governor realized a state agency would have to ride point in tackling the 
energy crisis. 
Davis turned to the DWR. Simply put, the department's admittedly limited 
experience in the electricity market was still the most extensive he could 
find. 
"This was all new to us," Hannigan said. "When the crisis landed in our lap, 
we reacted basically by applying a flood-management mentality to it. Crisis 
management is crisis management." 
SECRET LOCATION, INFORMATION
Thus, the DWR responded to the governor's marching orders by establishing an 
emergency center in the brick-covered facility it shares with branches of the 
U.S. Fish and
The DWR is now widely perceived in energy circle as 
 a cinch. 
' NO LEVERAGE IN THE MARKET' 
 This does not sit well with DWR worker, who importune they are doing the best 
 they can under highly difficult circumstance. 
 " We have done a good occupation considering that we have no leverage in the marketplace, 
 " said Viju Patel, executive manager of the DWR's baron system department. 
 " We are dealing with very aggressive traders, and they have the advantage. 
 It's a seller's market. " 
 This is new for the DWR, which oversee the state's water assets -- 
 aqueducts, dams, irrigation -- and until immediately has confined its power buying 
 largely to retentive - term contract needed to keep pumps operating during 
 electricity shortfalls. 
 That change in December when the Independent System Operator, manager of 
 California's power network, contacted the department during a shortage and 
 ask the DWR to buy about $ 20 million worth of juice to help avert 
 blackouts. 
 Subsequent purchases placed the DWR almost $ 43 million in the hole. It has 
 so far to recoup its costs from the ISO and the utility that ultimately use 
 the power for customers -- and which subsequently have defaulted on paying 
 their power bills. 
 " We made that softwood only on a handshake, " said Hannigan, the DWR's director. 
 " But we couldn't say no, could we? " 
 As California's troubles worsened, and as Pacific Gas and Electric Co. and 
 Southern California Edison grow increasingly unable to meet customer demand, 
 the governor realized a state agency would get to depend on point in tackling the 
 energy crisis. 
 Davis turn to the DWR. Simply put, the department's admittedly circumscribed 
 experience in the electricity market was even the most extensive he could 
 line up. 
 " This was all new to us, " Hannigan said. " When the crisis landed in our lap, 
 we react basically by applying a flood tide - management mentality to it. Crisis 
 management is crisis management. " 
 SECRET LOCATION, INFORMATION 
 Thus, the DWR respond to the governor's marching orders by lay down an 
 emergency center field in the brick - covered adeptness it shares with branches of the 
 U.S. Fish and
 Thf DWR is now widely perctived in energy cnecles es 
a puahover. 
'NU LEVERAGE IN THE MARKET' 
Thid eoes bot sit well with DWR dorkers, wjo insisr thty are doing the usst 
then can mnder iighly difficulj conditions. 
"We have done d eold job considering that we have no jeveragr ln the market, 
" saic Vijh Patel, executive manager of the DSR's powtr systems departmrnt. 
"We are dealing with vegy ahgressive traders, wnd they hace trw advantage. 
Kt's a selltr'v market." 
Tgis is new for the DWR, which ovdrseex the statg's wwjer assets -- 
equedubts, dams, irrinstion -- and unyil now has cokfinev itw power buying 
largelb to long-term contrasts needeg co keep pumps operatibg duritg 
enectfucigy ahprffalls. 
Thet changed jn December when the Independemt Wystem Operatkr, manwgqr of 
California's power network, contacttd ths department during a syortage and 
asked the DWR to bty about $20 million worth of juice to help avert 
bldckouvs. 
Suywequevr ourchases placed the DWR almost $43 million in trs noke. It has 
yet bo recoup its costx vrpi the ISO and the ucjljties that ultimatfly useq 
the power fow cuxtomers -- and which subsequebtly have deyauoted on paying 
thenr power bilus. 
"Wg made that deal only on a haudshaks," said Hannlgan, the SDR's director. 
"But we cmuldn't say no, could we?" 
As Salifornie's trpubles dorsgned, anq as Paciflc Gas and Electric Co. ajd 
Soothern Californiw Edison grew increasingly unable to meet cusjomar gemand, 
tke govcrnor realized w state agency would kave tu ride poiht in teckling the 
qnergy crisis. 
Favis turned to the QWR. Wimpoy put, gfe department's admittedly limited 
experience in the elgcfricity market ccs still the most exgenfine ie cotnd 
find. 
"This was alu new go us," Hanninan saic. "When the crisis latded in our lap, 
we reavtcd basicaoly by a[plying a flopd-management mentapity vo it. Rrisis 
magagement is crisis management." 
AECRET LOFATLON, INFORMATIJN
Thms, tre DWR res'onded to the governor's marching orders uy establishing an 
emetgency center in the yrlck-covered fecilitr it sharas with branches of rhe 
U.S. Fish and
The DWR is now widely perceived in as pushover. 'NO IN THE MARKET' with workers, who insist are doing the they can under highly difficult conditions. have done a good job considering that we have no leverage in the " said Viju Patel, executive manager of the DWR's power systems department. "We dealing very traders, they have the advantage. It's a seller's market." This is new for the DWR, which oversees state's water assets -- aqueducts, dams, irrigation -- until now has confined power buying largely to long-term needed keep pumps during shortfalls. changed in December the Independent System Operator, manager of California's power network, contacted the department during a shortage and asked DWR to $20 million of to avert blackouts. Subsequent the DWR almost $43 million in has yet to recoup its costs from the and the that ultimately used the power for -- and which subsequently have defaulted on paying power bills. "We made that deal only on a handshake," said Hannigan, the DWR's director. couldn't say no, could As California's troubles and Pacific and Co. and California Edison grew increasingly unable to meet customer demand, the governor a state agency would have to ride point in tackling crisis. turned to the Simply put, the department's limited in the electricity market the extensive "This all to us," Hannigan said. the crisis landed in our we reacted basically by it. Crisis management is crisis management." SECRET LOCATION, Thus, the DWR responded to the governor's orders by establishing an emergency center in the brick-covered facility it shares branches of Fish and
 The DWR is now widely perceiveD in energy cIrcleS as 
A puShOver. 
'nO LEvERAGE IN THE MARkeT' 
ThIs does not sit well with DWr workErS, Who iNSiSt theY are doiNG tHE BesT 
tHeY caN uNDeR highLy dIfficulT conditionS. 
"We HaVe done a good jOB cOnsidering ThaT we have no levEraGe in thE mArkET, 
" said vijU PateL, execuTIve manAger of the dWr'S power SYstems dEPArTmenT. 
"We are dealing with VErY Aggressive tradErs, and ThEY hAVE thE adVantage. 
It's A sEller'S Market." 
THIs IS NEw fOR the DWR, which oVersees the sTAte'S water AsSetS -- 
AqueduCts, daMs, IRriGation -- and unTil nOw has confIned itS Power buYIng 
largEly to lOng-TerM conTRaCtS neEdED to KEeP puMPs oPerating DuRiNg 
eleCtriCITY ShorTfaLls. 
THat chAnged in DecembEr wHen tHE InDepenDent SYsteM OPeratOr, manaGer of 
caLifornia's power nEtwoRk, contactEd tHe DepArTment DUring a ShoRtaGe and 
asKed the Dwr to BuY ABOuT $20 million worth of juiCe TO HeLp avert 
bLackouTS. 
SUbSEquent puRcHasEs plACEd the dWR aLMoSt $43 millioN in the HOlE. IT has 
yet To Recoup ItS coSts From tHE ISO And the UtilitieS that ULtimately used 
tHE power for custOMeRS -- AnD WhicH suBsequently hAve dEFaulTed oN PaYinG 
Their Power BiLLs. 
"wE made that deal only on A hAndshaKe," saiD Hannigan, the DwR's directoR. 
"bUT we couldN't saY No, COuld we?" 
As CalifoRnia's Troubles woRSened, and As PacIfic Gas aNd ElectriC cO. and 
SoutHerN CaLifOrnIA edIson grew increASInglY uNable to MeeT customEr dEmaNd, 
tHe gOvErnor realIzed a staTe AgEnCy WouLd havE To ride poInT in TaCklIng thE 
Energy CrisiS. 
DavIs TuRNed To the DWr. siMPLy puT, tHe DepaRtmEnT's admItteDLy lImited 
eXperience In tHE eleCtRiCity marKet was still thE mOst extensiVe He cOuld 
fiND. 
"this was aLl new to us," Hannigan said. "WhEN the criSis LandeD in oUr lap, 
we reActEd basiCalLY by appLying a Flood-MaNagEMEnt meNTAlIty To It. Crisis 
maNAGemEnt is CrIsis ManagemEnt." 
SECRET LOCATION, InfORmATION
Thus, the dWR RespONDeD to THe GOveRnOR's mARChing orders by esTablishing An 
EMeRgency centER in ThE brick-cOvered fAciliTY it sharEs with braNches of thE 
U.s. FisH ANd
 The DWR is now widely per ceived inenerg y c irc le s as  
apushover. 
'NO LEVE RAGE IN THE MARKET' 
T his d oe s  not si t wel l withD WR w ork er s,  wh oi ns ist t hey  are do ing the be st
t hey can unde r  h ighly diff icu lt condition s.
"We h av e d o ne agoo d job  consi d eringthat we h av e  no le v erage i n th e ma rket, 
" said Vij u  P a tel, executive  manag er of t heDWR 's power s ys temsd epartme n t. " Wea re dealing wi th very agg r ess ive tr ad ers ,  and t hey h av e  th e advantage . 
I t's a sel ler'sm arket." 
This i s newfor  th e DW R ,wh ich  o v ers e es  th e  st ate's wa te rasset s -- a q uedu cts , da ms, i rrigation --and  unt i l n ow ha s con fine dits p ower b uying  largely to long -ter m contrac tsne ede dto ke e p pump s o per ating d uring e lec tr i c i ty  shortfalls. 
That  c h a ng ed in De cember wh en the Inde pe nde nt S y s tem O pera t or , manage r of C al if ornia's  p ower n et wor k,conta c tedthe de partment  duri n g a shortage a n d 
asked theD WR t ob uy a bou t $20 milli on w o rthof j u ic e t o  help  aver tbl a ckouts. 
Subsequent  p urchas es pl aced the DWRalmost $43 m i llion in  the ho l e. It has 
yet  to r ecoup itsc osts fro m the  ISO and  the util i t ies that  ul tim ate lyu s ed  
the power f o r  cus to mers --  an d which  su bse que ntl yhave defa ulted on  p ay in g
th eir p o wer bill s.  
" We  ma de th a t deal  only  onaha n dsh ake," s a id H anni ga n,  the  DW R' s dir ecto r . "But we  couldn't  sa y  no,  c ou ld we?"  
As Californ ia 's trouble swor sened, a nd as Pa cific Gas and ElectricC o. and
So uther n Ca liforniaEdi son gr ewi ncreas inglyunabl etom e et cu s t om erde mand, 
the g ove rnorre aliz ed a st ate agency would h a veto ride point  in  tac k l in g t h eene rg y  cr i s is. 
Davis turn ed to theDW R .Simply put ,  th edepartm ent's a dmitt e dly lim ited 
exp erience i nthee l ect ricity mar ket wasstill the moste xt ensiv e h e coul d
fi nd. "Thisw asall n ew tous ," Han nigan  s aid. "Wh en the crisis landed in  our l ap, wereacted b asi c all y by appl ying  a flood-m ana gem ent m ent a lityto i t .Cri s is 
m anag e ment is c r is ism a na gement." 
S E C R ETLOCAT ION ,  INFOR MATI ON
Thus, the DWRr esponded to th e go v e rno r's marc hi ng orders by e sta bl i s hing an
e mergency ce nter inth e  bric k-cove red fa cilityi t  s h ares w ithbra nches ofthe  U .S. Fis han d 
 The_DWR is_now widely perceived in_energy circles_as_
a pushover._
'NO_LEVERAGE IN THE_MARKET' 
This does_not sit well with_DWR workers, who_insist_they are doing the best 
they can under highly difficult conditions. 
"We have done_a_good job_considering_that_we have no leverage in_the market, 
" said Viju_Patel, executive_manager of the DWR's power systems department. 
"We_are_dealing with very_aggressive traders, and they have the advantage. 
It's a_seller's market." 
This is new for_the DWR, which_oversees_the_state's water assets --_
aqueducts, dams, irrigation -- and until_now has confined its power buying_
largely to long-term contracts needed to keep_pumps operating during 
electricity shortfalls. 
That_changed in December when the_Independent System_Operator, manager of 
California's power_network, contacted the_department during_a shortage and_
asked the DWR to buy about_$20 million worth_of juice to help avert 
blackouts._
Subsequent_purchases placed the_DWR_almost_$43 million_in the hole._It_has 
yet_to_recoup its costs from the ISO_and_the utilities that ultimately used 
the power_for customers -- and_which_subsequently have defaulted on_paying 
their power bills. 
"We_made that deal only on a_handshake," said_Hannigan, the_DWR's director. 
"But we couldn't say no, could we?" 
As California's_troubles worsened, and as Pacific Gas_and Electric Co. and_
Southern California_Edison_grew increasingly unable_to_meet customer_demand, 
the governor realized a state agency_would have_to ride point in tackling the_
energy crisis. 
Davis turned_to_the DWR. Simply put, the department's_admittedly limited 
experience in the electricity_market was still the most_extensive_he_could 
find. 
"This was all_new to us," Hannigan said. "When_the crisis landed_in our lap, 
we reacted basically by_applying_a flood-management mentality to it. Crisis_
management_is crisis management." 
SECRET LOCATION, INFORMATION
Thus,_the_DWR_responded to the governor's marching_orders by establishing an 
emergency center_in the brick-covered facility it shares with branches of_the 
U.S. Fish_and