Published Tuesday, Dec. 19, 2000, in the San Jose Mercury News

Energy crunch pinches the West NEIGHBORING STATES IN COMPETITION AS DEMAND, RATES RISE BY STEVE JOHNSON Mercury News

As if escalating electricity prices and the increasing threat of blackouts weren't enough, California now faces a growing reluctance among its neighbors to share their power, because of an energy crunch across the West.

Officials from a number of Western states plan to meet in Denver on Wednesday to confer with U.S. Energy Secretary Bill Richardson on the problem. Among other things, the governors of California, Oregon and Washington have implored the federal government to impose a wholesale price cap throughout the West, in hopes of getting prices under control.

But so far, federal officials have balked at that request. And even if such a cap were imposed, officials say, it would do nothing to boost the dwindling supply of electricity, and could even make power more scarce by creating a disincentive for power companies to build much-needed plants.

As a result, some experts fear that competition over power could easily worsen among Western states, which would be especially bad news for California, since it depends on its neighbors for about a fourth of its electricity during periods of peak use.

``I can't see anything that's going to make it better,'' said Bill Comish, a senior official at the Western Systems Coordinating Council in Salt Lake City, which helps manage the flow of power throughout the region. ``I don't see any letup in this current situation for maybe . . . a couple of years.''

California officials say the last thing they need is more trouble importing power from other states. Last week, some Pacific Northwest power generators balked at selling to California because of concerns that two of the state's main utility firms -- Pacific Gas & Electric Co. and Southern California Edison -- might be heading for bankruptcy and wouldn't be able to pay their bills. After complaints from California officials, Richardson ordered the northern generators to make their power available to the state.

But the problem isn't going away. Gov. Gray Davis said Monday that Southern California Edison ``is in extraordinarily difficult financial circumstances and may not make it through the week'' unless the federal government acts to impose a rate cap throughout the West.

``It's my job to be steward and guardian of California's economy,'' Davis said during a television interview. ``And I'm not going to let it be dragged to its knees.''

Over the last decade, few new plants have been built, not only in California but also throughout this section of the nation. Still, the amount of power available to Western states appears sufficient -- at least on paper -- to meet demand.

According to the council, the West can generate about 158,000 megawatts, which is enough for about 158 million homes, and consumes only about 130,000 megawatts during periods of heaviest summer use. During winter, when about the same amount of power is available, it usually needs only about 120,000 megawatts.

But at any given time, Comish said, much of the power that can be generated is unavailable because plants are out of commission for maintenance. Because of such repairs, California found itself short about 11,000 megawatts two weeks ago, which plunged the state perilously close to experiencing blackouts. The shortage also had a profound effect on Oregon and Washington.

California normally imports much of its power from the Pacific Northwest during the summer, when its electricity use peaks. Then, in the winter, it usually ships much of what it produces north, because that's when electricity use there hits its highest level.

But this year, with a huge number of California plants undergoing repairs, the state was unable to ship much to Oregon and Washington. Moreover, many of the region's dams had too little water to run hydroelectric systems. The result was critically short power supplies, rapidly rising prices and growing angst throughout the Pacific Northwest.

``Federal action must be taken at once to restore stability and rationality to the market,'' declared Washington Gov. Gary Locke, who blamed the 1996 California law that removed many of the government's regulatory controls over the production and sale of electricity here. ``These prices reflect problems resulting from wholesale deregulation and California's flawed restructuring experiment.''

Oregon Gov. John Kitzhaber offered similar criticism of California, adding that without some regional solution to the problem, ``the situation threatens to escalate such that the whole West may be short of power throughout a cold and dry winter.''

Bad feelings have been building for several months between California and its northern neighbors. In October, they spilled out onto the floor of Congress in a dispute over who gets access to the hydroelectric power generated in the Pacific Northwest by the federal government's Bonneville Power Administration.

California Congressman George Miller, D-Concord, and U.S. Sen. Barbara Boxer, complained that Bonneville was signing long-term contracts with northern customers that meant California would have a harder time getting that electricity. The deals, they claimed, ``could have significant impacts on the availability of electricity and the costs of power for millions of our constituents throughout California.''

But Sen. Ron Wyden, D-Oregon, was concerned about his constituents. While Bonneville has helped California keep the lights on in the past, he said, ``What exactly is it doing to promote reliability and low-cost power in the Pacific Northwest?''

Some states are considered better off than others. California is generally regarded as being in the worst shape because of its power deficiency. While Oregon and Washington normally are deemed to be in good shape because of their extensive hydroelectric plants, cold weather and dry dams this winter have created big problems for them. Shortages also are showing up in Arizona and Nevada, because of the fast pace of development in those areas, some energy officials said.

``Demand is growing in all of the states in the West and is projected to continue to grow,'' said Mark Stultz, a spokesman with the Electric Power Supply Association, a trade group for power suppliers. And among many of those states, he added, ``There is competition for those electrons.''

Dave Penn, deputy executive director of the American Public Power Association, which represents government-owned electricity producers, also fears for the future.

``I'm terribly pessimistic,'' he said. ``You just have a tight generation capacity situation in the whole West, not just California . . . It just almost by definition puts states and regions in friction with one another.''

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-- Martin Thompson (mthom1927@aol.com), December 20, 2000