Blackout threat remains as California scrambles for electricity

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Posted at 5:50 p.m. PST Saturday, Dec. 9, 2000

Blackout threat remains as California scrambles for electricity BY JOHN HOWARD Associated Press

SACRAMENTO, Calif. (AP) -- California strained through a chilly weekend to keep electricity flowing, as wholesale power prices soared.

``I don't know how long this can go on,'' said Greg Pruett, a spokesman for Pacific Gas and Electric Co.

The California Independent System Operator, which controls the power grid for much of the western United States, declared a statewide alert Saturday, urging California homeowners and businesses to conserve power. The state narrowly avoided blackouts Thursday when power reserves dwindled dangerously.

The power crunch has been blamed on cold weather in the Northwest, the shutdown of some generating plants for repairs or other reasons and the effects of utility deregulation in California.

With an Arctic front pushing freezing temperatures down from Canada, the Pacific Northwest is bracing for another cold snap that is expected to further increase demands for electrical power.

Washington Gov. Gary Locke has asked homeowners and businesses to conserve as much electricity and natural gas as possible, and Washington state regulators met in emergency session Saturday to consider allowing two utilities to offer financial incentives to big businesses that agree to cut power use.

``If we act quickly together, we can hopefully avoid disturbances and brownouts next week,'' Locke said. Officials in Oregon, Wyoming, Idaho and Montana have also joined the call for energy conservation.

``Once again, it's the supply issue,'' said ISO spokesman Patrick Dorinson. ``We're all drawing off the same system.''

Late Friday, the Federal Energy Regulatory Commission approved ISO's request to lift price caps on wholesale electricity, a move the grid regulators said would help ease the crunch.

But California Gov. Gray Davis said the decision would only push electricity prices higher. He said he has asked for a Congressional investigation.

Apart from the FERC's decision, wholesale electricity costs have soared.

Last year, utilities paid roughly $22 to $45 per megawatt hour, said Tom Williams, a spokesman for Duke Energy, a wholesale power provider. This year they have paid an average of 15 times that amount. A megawatt is enough to power about 1,000 homes.

In California, the two largest electrical utilities -- Pacific Gas & Electric Co. and Southern California Edison Co. -- operate under a rate freeze and cannot pass those wholesale price spikes on to their customers. Pruett said PG&E has absorbed $4 billion in losses since June.

The price of natural gas, which most power plants use to produce energy, has also soared. A week ago, wholesale natural gas sold for less than $20 per million British thermal units, the standard measurement; on Saturday, it was selling for about $60 per million Btu.

California in 1996 approved a phased-in deregulation of the $20 billion electricity market, which was supposed to lower prices by increasing competition. But demand for electricity has outstripped supply, in part because of a growing population and a booming high-tech economy.

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-- Martin Thompson (mthom1927@aol.com), December 09, 2000


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