Heat wave raises energy red flag for Net economy

By Rachel Konrad

Staff Writer, CNET News.com

May 24, 2000, 6:05 a.m. PT

Logging off for the day? Don't forget to turn off the lights--and the air conditioner while you're at it.

The San Jose, Calif.-based Silicon Valley Manufacturing Group issued a warning yesterday to its 175 members to conserve energy during the San Francisco Bay Area's first major heat wave of the year.

The warning affects about 250,000 workers, or one in four employees in Silicon Valley. On Monday, the California Independent System Operator issued a "stage two emergency" and the state's utility providers requested that companies voluntarily minimize energy consumption. CISO controls the flow of electricity statewide.

The warning highlights industry concerns about energy supply in an increasingly online world that is using huge amounts of energy to fuel the Internet economy. The problem is even more pronounced where Internet use is concentrated, such as Silicon Valley or technology pockets in major cities around the globe.

"Is it going to be a tight summer? Of course," said CISO spokesman Patrick Dorinson. "We believe we're going to be prepared for it, but it's going to be tough."

Pre-Memorial Day warnings have prompted some energy experts to brace for a long, hot summer of brownouts and blackouts in the Bay Area, ground zero for the nation's booming technology sector. Last year, CISO's first and only stage two emergency didn't happen until July.

Although costs are difficult to calculate, some large tech firms that rely on continuous connectivity lose millions of dollars per minute when the power dies, a SVMG spokeswoman said. To avoid such outages, Oracle spent more than $6 million to build its own substation and generators to supply energy to its headquarters in Redwood Shores, Calif.

"If you're in e-commerce and you lose power for 30 seconds, imagine what that means for your business," said SVMG communication director Michelle Montague-Bruno. "To have rolling blackouts or brownouts--that's a serious issue."

A summer of power disruptions, no matter how slim, could dent the efficiency of some of America's most important technology companies. It could also inconvenience millions of their employees, clients and customers.

It's enough of an issue that the SVMG in June is hosting a conference, the Silicon Valley Energy Summit, dedicated to addressing energy supply and demand.

Energy experts say the potential for more frequent power disruptions looms large: The nation's voracious demand for energy-sucking gadgets--from giant mainframes to handheld computing devices--and America's growing fondness for air conditioning are set to converge ominously this summer.

Such a scenario is a stark reversal of past energy consumption. As recently as a decade ago, demand peaked in the winter, when huge factories and urban areas in northern states clamored for heat. But the rise of the Internet economy and the migration to America's Sun Belt flipped the pattern.

The situation in California is particularly menacing because of the state's phenomenal growth: California has absorbed 580,000 newcomers in the past year for a total of about 34.3 million residents, according to CISO. California also gets some energy from the Southwest and Northwest regions of the United States--areas that have outpaced national growth rates.

Does this mean the Silicon Valley technology companies that have fueled unprecedented prosperity and have become the nation's economic engine will go black, crippling America's industrial output?

"You can certainly construct a point where that indeed happens," said Garold Spindler, an independent energy consultant and past president of Cyprus Amax Coal Company and Pittston Coal Company.

Spindler noted that the reason for blackouts would likely be an inability of energy providers still struggling with industry deregulation to transmit energy to places that need it--not a lack of energy supply. But the net effect on businesses and consumers is a blackout.

Pacific Gas & Electric will not disclose which customers have volunteered to reduce power during stage two alerts in exchange for price discounts. But spokesman Ron Low said many volunteers affected during the current heat wave were "large, commercial customers" throughout Northern California. They were asked to minimize energy consumption or else face financial penalties.

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-- (JustMe@right.here), May 24, 2000