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02/14 17:28 California's Threat of Blackouts Increases as Power Plants Shut By Christopher Martin

San Francisco, Feb. 14 (Bloomberg) -- California may face blackouts for several weeks because supplies from Canada may end at any time, the state's largest generators have been shut for repairs and conservation measures have proven ineffective.

California's Independent System Operator, which controls about 75 percent of the state's grid, has struggled to avoid blackouts as more and more plants shut down unexpectedly, said spokesman Patrick Dorinson. Blackouts were narrowly averte last night with help from hydroelectric dams in the Pacific Northwest.

British Columbia's Hydro & Power Authority has been selling the state as much as 1,200 megawatts, said ISO spokeswoman Lisa Szot. California last week missed making a partial payment to BC Hydro of the $300 million it owes them, and supplies may end at any moment. BC Hydro wasn't immediately available to comment.

``We're going hour-by-hour with them,'' Szot said. ``If that supply dries up, then we'll probably have blackouts.''

Plants that generate 10,384 megawatts, or about a third of the state's demand, are offline, Dorinson said. Southern California lost 400 megawatts unexpectedly last night, raising total unplanned outages to 7,960 megawatts, or enough to serve about 8 million homes. Demand is expected to peak at 30,968 megawatts tonight at 6 p.m.

``We're still hoping to avoid blackouts,'' Dorinson said. ``We're trying our best to get additional megawatts online.''

The ISO ordered rolling blackouts twice last month to avoid system-wide shutdowns. California is in its 30th day of ``Stage 3'' emergencies, the state's highest electricity alert, with energy reserves below 1.5 percent.

Generators Offline

Edison International's Southern California Edison shut one of the reactors at its San Onofre nuclear plant after a fire broke out as the unit was being restarted on Feb. 3. That 1,120-megawatt reactor, which was shut for refueling on Jan. 2, won't restart for at least several weeks, said plant spokesman Ray Golden.

Pinnacle West Capital Corp.'s Arizona Public Service Co., operator of the biggest U.S. nuclear plant, said it plans to shut one of its three reactors this weekend for repairs. That 1,270- megawatt reactor, near the California border in Wintersburg, Arizona, will be closed for about two weeks, the company said.

Duke Energy Corp. in October shut one of its two natural gas- fired generators on the Central California Coast to install pollution reduction equipment. That 750-megawatt unit was originally expected to return to service early this month, and is undergoing tests before it restarts, the company said.

``We'd love to have it up as soon as possible,'' said Duke spokeswoman Cathy Roche, adding that she couldn't estimate when it might restart. Duke plans to shut down the other unit in March or April for similar upgrades needed to reduce pollution.

``We're going to work with the state (on timing) to be the least disruptive,'' Roche said.

Duke and other power-plant owners have balked at being forced by the ISO to sell electricity to California on behalf of the state's two largest utilities, owned by PG&E Corp. and Edison International. The utilities stopped paying their bills to the ISO after accumulating about $12 billion in losses buying electricity at higher prices than they can charge customers.

Electricity prices have soared 10 times since last year as natural gas prices surged and a drought reduced hydroelectric power from the Northwest. The state's 1996 deregulation law caps utility rates, squeezing the utilities since they can't pass on their rising costs.

Few Volunteers

Making matters worse, the businesses that agreed to reduce consumption during such emergencies in exchange for lower rates can no longer be counted on. Regulators last month stopped penalizing customers that don't reduce demand, saying the plan crippled some business and could harm California's economy.

Edison, the state's No. 2 utility, yesterday and today asked customers to reduce demand by 1,100 megawatts, said spokesman Steve Hansen.

The ISO called for the emergency cutbacks to avert shutting off power to entire neighborhoods. Just 263 megawatts in cuts, or about a fourth of the requirement, were made yesterday, it said.

``There's no longer a penalty if they don't comply,'' ISO spokeswoman Szot said.

More than 1,700 customers representing 3,500 megawatts of electricity demand are involved for the 20-year-old program. That's enough power to light about 3.5 million homes, or more than 10 percent of California's average winter season demand peak.

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20World%20News&s1=blk&tp=ad_topright_topworld&T=markets_bfgcgi_content99.ht&s2=blk&bt=ad_position1_windex&middle=ad_frame2_windex&s=AOosGpBcLQ2FsaWZv

-- Martin Thompson (mthom1927@aol.com), February 14, 2001