FEBRUARY 08, 05:37 EST (Update) Judge Keeps California in Power

By JENNIFER COLEMAN Associated Press Writer

SACRAMENTO, Calif. (AP) — Power-starved California enjoyed yet another reprieve after a federal judge ordered one of the state's biggest suppliers to keep the electricity flowing — at least for another day.

U.S. District Judge Frank C. Damrell Jr. said Wednesday his temporary restraining order would remain in effect until he rules on whether Reliant Energy Services Inc. must continue supplying power to California utilities. A decision was expected Thursday afternoon.

The Houston-based company is responsible for about 9 percent of California's energy. The state's power managers say stopping the flow could cause a domino effect resulting in even worse blackouts than those that darkened parts of California two days last month.

``Not only could it result in rolling blackouts, but completely uncontrolled blackouts,'' said Norma Formanek, an attorney for the California Independent System Operator, which controls most of the state's power grid.

Reliant officials fear they might never be paid for the power they're supplying and accuse the ISO of overstating the potential impact.

``The ISO has grossly, grossly exaggerated the nature of the problem,'' said Reliant attorney Terry Houlihan.

Reliant wants the state to stand behind the power purchases, noting that California's two biggest utilities, Southern California Edison and Pacific Gas & Electric Co., have said they are $12.7 billion in debt and near bankrupt.

Gov. Gray Davis is unwilling to do that because he believes Reliant wants to drive up prices by locking the state into purchases on the costly spot power market, Davis spokesman Steve Maviglio said.

As the judge took the arguments under consideration, state officials continued to seek a permanent solution to the crisis that is costing California tens of millions of dollars a day.

The crisis has been blamed on a variety of factors, including limited hydroelectric supplies, transmission line troubles and aging power plants taken out of service for maintenance and repairs. The state has been under a Stage 3 alert — signaling power reserves at 1.5 percent or less — for a record 24 consecutive days.

Davis was expected Thursday to unveil a plan for expediting construction of new power plants. Officials also were moving forward on the transmission-line problem, announcing that the ISO had approved a multimillion-dollar plan to ease an energy bottleneck blamed in part for last month's rolling blackouts in Northern California.

The major conduits that move power between the northern and southern ends of the state narrow to just two 500,000-volt lines along an 80-mile section of Northern California.

PG&E has put off expanding that section for years, saying the system's importance would fade as new power plants opened in Northern California. Last week, it told the ISO it would expand the route, and the ISO's director of grid planning agreed Wednesday to a proposal to spend as much as $300 million over five years completing the expansion.

Davis and other lawmakers, meanwhile, continued to struggle to find a solution to the $40 million to $50 million the state has been forced to spend daily since January to buy power on the expensive spot market while its biggest utilities are out of cash.

The administration is negotiating long-term power contracts that would have California spend an estimated $10 billion to provide reliable, affordable power to nearly 9 million customers of Edison and PG&E.

San Jose-based Calpine Corp. has reached a 10-year contract with the state worth about $4.6 billion. The contract starts in October and will provide a constant block of power, starting with 200 megawatts and rising by January 2004 to 1,000 megawatts — enough to power 1 million homes.

Lawmakers also are working on a proposal to acquire PG&E's and Edison's transmission lines.

Edison CEO John Bryson said Wednesday the utility would be willing to consider such a proposal but would expect to be paid ``fair value'' for the lines, which estimated at about $3 billion.

On the Net:

ISO: http://www.caiso.com

Transmission legislation: http://www.sen.ca.gov

-- Swissrose (cellier@azstarnet.com), February 08, 2001