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SDG&E Blackout Plan Would Pay Firms to Use Generators

Utilities: Program in which large customers produce their own power is forecast to cut demand by as much as 50 megawatts, save $1.6 billion.

By NANCY RIVERA BROOKS, Times Staff Writer

San Diego Gas & Electric unveiled a novel plan Thursday to pay customers to fire up their backup generators when blackouts threaten. The utility said the program could cut demand on the power grid by 50 megawatts--enough to serve about 37,500 homes--allowing it to avoid or minimize blackouts this summer in San Diego and southern Orange County.

"California needs an infusion of new power supplies, but in the interim, we hope this unique program will help shield San Diego from some of the devastating effects of rolling blackouts this summer, including the increased risks to public safety and health," SDG&E President Debra L. Reed said.

The Rolling Blackout Reduction Program, as the Sempra Energy subsidiary has dubbed it, would cost $15 million to implement but could save the region as much as $1.6 billion in lost revenue reduced productivity and property damage, the utility has estimated.

Energy experts are forecasting a dark summer for California, with blackout totals ranging between 20 hours and 1,100 hours. The California Independent System Operator, which runs the electricity transmission grid for most of the state, has said residents face 34 days of rotating outages if they use the same amount of electricity this summer as they did last summer.

The state and utilities have been working feverishly to develop programs that will reduce electricity use this summer. SDG&E, Edison International's Southern California Edison and PG&E Corp.'s Pacific Gas & Electric have programs that grant large customers lower electricity rates in exchange for cutting electricity use when Cal-ISO declares a Stage 2 emergency as power reserves dip below 5%. But participation in those programs has dropped sharply because of repeated power interruptions.

SDG&E's "interruptible" program represents 49 megawatts of demand, half of what it was in October, spokesman Ed Van Herik said. The new SDG&E program, which must be approved by the California Public Utilities Commission, would kick in whenever Cal-ISO declares a Stage 3 emergency, indicating that power reserves are down to 1.5% of demand and that rolling blackouts are imminent.

SDG&E hopes to sign up 50 megawatts of backup generation, representing about 40 large commercial and industrial customers, but believes customers capable of generating a total of 200 megawatts may be eligible for the program, Van Herik said. "We found a lot of customers are interested in this program," he said. "This is an opportunity for San Diego to become involved."

During a Stage 3 order, program participants would be asked to start their backup generators and then reduce the electricity they receive from SDG&E by the same amount.

Participants would be paid a monthly fee of $7 per kilowatt of generation capacity. On top of that, they would receive 35 cents for every kilowatt-hour of power they generate for their own use. That price is about what power plant owners have been commanding in California's pricey electricity market.

"We think the fees we are proposing are fair," Van Herik said. "These aren't people who are in the generation business, and undoubtedly there will be wear and tear on equipment and increased personnel and fuel costs."

The program, which SDG&E wants to implement by June 1, would operate in compliance with air pollution regulations, the utility said.

Copyright 2001 Los Angeles Times

-- Swissrose (cellier3@mindspring.com), May 04, 2001