Storm-Lashed California Averts Blackouts

Thursday, January 11, 2001

By Arthur Spiegelman

LOS ANGELES (Reuters) - With the worst storm in three years lashing its shores and its two biggest utilities on the brink of bankruptcy, California had a stroke of luck on Thursday as it appeared to narrowly avert a series of statewide blackouts to conserve dwindling energy supplies.

The blackouts had been ordered by the California Independent System Operator (ISO) as part of what is called a "Stage Three Emergency" -- the highest-level power emergency --- and were to have affected more than 1.5 million people in the nation's richest and most populous state.

But just an hour before the blackouts were scheduled to start at 5 p.m. PST as a last-ditch effort to avert a power grid collapse, ISO said it had found an angel.

Bonneville Power Administration (BPA), which operates federal power projects on the Columbia River in the Pacific Northwest, began shipping emergency supplies to California.

A spokeswoman for Bonneville in Portland, Ore., said it would send about 1,000 megawatts south to California, roughly the shortfall California was desperately seeking.

Patrick Dorinson, an ISO spokesman, said the emergency shipments from BPA are "making our situation in California look better" and called the need to order blackouts "less likely."

The ISO had warned throughout the day that rolling blackouts, which would shut down neighborhoods for about an hour at a time to avoid collapsing the grid after a combination of stormy weather and an unprecedented number of power plant outages threatened to topple the state's electric system.

Thursday marked only the second time that the ISO had declared a "Stage Three Emergency" and the first time that it had ordered statewide blackouts since the state's power crisis took hold last year when California's efforts to deregulate the price of power boomeranged.

With the winter storms knocking out power plants and creating record cuts in supply, the ISO's chief operating officer Kellan Fluckiger predicted that the proposed blackouts "could last as long as four hours."

A loss of 1,500 megawatts would impact around 1.5 million of the state's 34 million residents.

California has been shoved to the brink of power blackouts in recent weeks because of tight supplies of electricity.

FORCED TO PAY SKYROCKETING PRICES

To meet demand, the state's utilities have been forced to pay skyrocketing prices for wholesale electricity on the spot market but they are rapidly running out of cash and credit because they are not allowed to pass the extra costs on to consumers under a 1996 deregulation law.

Federal, state and industry negotiators met for a third consecutive day in Washington on Thursday to fashion a plan aimed at giving California utilities as much as 90 days to pay off their estimated $12 billion in mounting debts for power and stave off bankruptcy.

Negotiators at the Treasury Department also focused on ways that would allow California utilities to sign long-term contracts to buy supplies at fixed prices, avoiding skyrocketing prices in the volatile spot market.

Outgoing Clinton administration Energy Secretary Bill Richardson told reporters that one option on the table would give both utilities up to 90 days breathing time before they must repay billions of dollars owed to out-of-state power generators.

Richardson also issued an emergency order requiring generators and power marketers to sell surplus electricity to California. A similar order had expired at midnight.

The energy secretary wants a price cap on wholesale electricity costs sold in Western states. He has urged the Federal Energy Regulatory Commission, the independent agency which regulates interstate transmission rates, to take such action. So far the agency has refused.

"We've been urging them to impose at least some regional price caps that ease the situation on a short-term basis," Richardson said.

He said the power suppliers see "there's a little bit of a light at the end of the tunnel," indicating the suppliers are ready to give the utilities some financial breathing room. "Things are better now," he said.

The high spot market power prices have thrown the state's two biggest utilities, Edison International's Southern California Edison and PG&E Corp.'s Pacific Gas & Electric to the edge of bankruptcy. Last week SoCal Edison said it would lay off about 13 percent of its staff and on Thursday PG&E said it was cutting 325 jobs to save about $180 million.

A state law that deregulated the state's electricity markets imposed a rate freeze until 2002, preventing utilities from passing onto consumers the high cost of power. Pacific Gas and Electric said on Wednesday it did not have enough cash to pay bills and asked the state for help in buying natural gas.

STORM ADDS TO POWER WOES

To add to California's problems, the state was hit Wednesday by its worst winter storm in three years. By Thursday morning, the continuing storm had dumped up to a foot of snow in coastal mountain areas, more than 4 inches of rain and hail at sea level, and prompted dangerous mudslides and road closures along California's Central Coast.

The storm, which is forecast to be followed by more heavy rains and high winds on Thursday, put a strain on power supplies, causing a record number of outages at power plants.

It also forced an 80 percent drop in production from the two nuclear units at the 2,200 megawatt Diablo Canyon power station in central California as huge waves washed kelp into the plant's seawater cooling intakes.

http://news.lycos.com/headlines/TopNews/article.asp?docid=RTNEWS-UTILITIES-CALIFORNIA-DC&date=20010111

-- Martin Thompson (mthom1927@aol.com), January 11, 2001

Answers

FOR IMMEDIATE RELEASE Contact: Patrick Dorinson

January 11, 2001 (888) 516-NEWS

POWER RESERVES REMAIN CRITICALLY LOW

California ISO Calls for Continued Energy Conservation

(Folsom, CA) Friday, January 12th has been declared a Power Watch Day by the California Independent System Operator (California ISO). Power reserves have been tight all week with a large amount of generation capacity unavailable due to planned and forced outages. After a day-long Stage Three Electrical Emergency declaration, rotating customer outages were narrowly averted Thursday evening. Friday’s peak demand on the ISO-controlled Grid is expected to reach 31,729 megawatts at approximately 6:00 p.m. The California ISO urges Californians to watch their energy consumption, curtailing their use of electricity whenever possible. Increased conservation efforts during the peak usage hours of 5:00- 9:00 a.m. and 4:00-7: 00 p.m. would be helpful. Power Watch is a public awareness campaign sponsored by the California ISO to communicate the current electricity resource outlook, in light of the rising demand for power in California. By providing regular updates on system conditions and peak demand forecasts, the California ISO hopes to convey the importance of using electricity wisely on days when electricity reserves may run low. Incorporated under California law (AB 1890), the not-for-profit California ISO is chartered by the state to manage the flow of electricity along the long-distance, high-voltage power lines that make up the bulk of California’s transmission system. Following restructuring of the state’s electricity industry, the California ISO’s mission is to keep the open market power grid in California reliable, safe, competitive and accessible. Information about the California ISO control area’s electricity supply and the current demand is available on the web at www.caiso.com. For questions relating to the status of the electrical distribution systems that carry electricity directly to homes and businesses, please contact your local utility. - ISO -

-- PHO (owennos@bigfoot.com), January 12, 2001.