US West's Power Crisis Offers Tough Choice

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US West's Power Crisis Offers Tough Choice Saturday February 3, 4:54 PM EST By Nigel Hunt PORTLAND, Oregon (Reuters) - Sacrifices must be made if the lights are to stay on in power-starved western U.S. states and regional governors at an emergency "summit" are being forced to contemplate stark choices.

The welfare of endangered salmon, plans for cleaner air and the jobs of thousands of workers were hanging in the balance this week as governors from 10 states groped for answers on how to tackle the chronic shortage of electricity that already has caused rolling blackouts in northern California.

A bungled California deregulation experiment coupled with an unexpected surge in demand have created an acute electricity shortage, sending wholesale power prices skyrocketing.

At the governors' meeting here, leaders of Native American tribes in the Northwest made a plea to protect the salmon as water normally used to help their spring migration has already been partly used up for power generation.

"We have run the hydro system harder than it was supposed to be run this year," said Steven Wright, acting administrator for the Bonneville Power Administration (BPA) which operates massive hydropower dams in the region.

"We are drawing down the reservoirs thereby compromising the spring flush for salmon,"

The dams and their massive power-generating turbines pose a threat to the salmon which swim the rivers of the Northwest.

BPA usually redirects millions of gallons of water in the spring to ensure the fish are not killed by the turbines' huge blades.

Several summit participants pointed out that the salmon could be saved, but only at the cost of another environmental goal: cleaner air.

Power plants' 2001 pollution allowances have been cut and reversing that move would allow the plants to generate more electricity.

"We need a moratorium on having the air cleaner for a period," said Peter Esposito of independent power producer Dynegy (DYN), who argued that an extra 3,000 to 4,000 megawatts of electricity would show up if emission controls were not tightened. One megawatt can power around 1,000 homes.

However, Los Angeles is already one of the most polluted cities in the United States and power plant emissions there have been linked to serious illnesses such as asthma.

Many of California's power plants are more than 30 years old and the struggle to avoid blackouts has also meant that the plants could not be idled for months to allow upgrading to reduce pollution emissions.

"These are dirty plants," noted Esposito.

Sky-high power prices have already led to thousands of job cuts in the region. Operators of power-hungry aluminum smelters are among those who have opted to shut down. Other power-intensive industries like food processing and refrigeration have also been hard hit.

Alan Richardson, chief executive officer of utility PacifiCorp, a unit of Scottish Power Plc. (SPW), said his company was talking to farmers in Idaho, Utah and Oregon and asking them to consider taking "a long summer holiday."

Farmers use much needed water and energy to irrigate their crops and utilities like PacifiCorp are willing to pay them for power they will save if they decide not to plant this year.

Richardson said current prices of many crops are already depressed, so the utility was getting a good response.

"We are using the willing buyer, willing seller concept," he told the emergency meeting.

The quest to conserve power may have other consequences this summer as commercial consumers seek to moderate their use of power-hungry air conditioning systems.

"I think this will be a casual summer in California with a lot of short sleeves and no ties," said Severin Borenstein, director of the University of California Energy Institute. ©2000 Reuters Limited.

http://money.iwon.com/jsp/nw/nwdt_rt.jsp?cat=USMARKET&src=201§ion=news&news_id=reu-85316&date=20010203&alias=/alias/money/cm/nw

-- Martin Thompson (mthom1927@aol.com), February 03, 2001


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