PUC considers protecting oil refineries from power blackouts

Industries invited to argue their cases for exemptions

George Raine, Chronicle Staff Writer

Saturday, May 19, 2001, ©2001 San Francisco Chronicle

URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/19/BU226776.DTL&type=news

Lobbying efforts to add industries to the category of energy customers immune from rolling electrical blackouts apparently has prompted the California Public Utilities Commission to invite businesses to apply for the coveted protection.

Only "essential-use customers," whose services are needed for public health and safety, such as fire and police stations and air traffic facilities, are exempt from the blackouts. However, there has been intense lobbying on behalf of oil refineries, skilled-nursing facilities and water agencies, in particular, to have the PUC bring them into the protected category.

PUC Commissioner Carl Wood said yesterday he will brief reporters in Los Angeles Monday about an application process for business customers seeking exemptions. He said the PUC is negotiating with a consultant who, it believes, could do an objective evaluation of the competing claims by refineries and others.

There are a limited number of exemptions available to the PUC. By the agency's own standard, at least 40 percent of the electrical load must be exposed to blackouts. Currently, 50 percent of the load is exempt, which leaves only a 10 percent margin to divvy up among the facilities applying for exemptions.

"If you can't conduct rolling blackouts, the system collapses," said Wood.

A bill is pending in the California Legislature that would put oil refineries at the end of the line of industries that would have to be inconvenienced in a power shutdown, but would not exempt them from blackouts. The bill is inspired in part by the California Energy Commission and several members of Congress who say the availability of gasoline, diesel fuel and aviation fuel is critical to public health.

In a filing at the PUC, the Energy Commission concedes that the greater the number of customers who are granted essential service status, the fewer customers there are remaining who can be curtailed.

However, the Energy Commission said there is an economic argument for protecting refineries. There are only 13 refineries in the state, producing cleaner-burning fuels that state law requires, and the supply and demand balance of fossil fuel in California is extremely precarious, the filing said.

"The shutdown of just a single refinery can lead to a supply shortage and a price spike. Price spikes, in turn, can last up to four weeks," the Energy Commission wrote.

The Chevron refinery in Richmond has a cogeneration plant that can be used as a backup in the event of a blackout (as does the Chevron refinery in El Segundo). But these plants can't provide enough power for the refinery to operate at full capacity, said company spokesman Fred Gorell.

The PUC has included all hospitals in California in the exempt category, but skilled-nursing facilities, represented by the California Association of Health Facilities trade association, are not included. Operators of skilled-nursing facilities argue they are little different than many acute-care hospitals.

"Amusement parks want to be exempt, too, but while you can go without riding a roller coaster for 24 hours, you cannot be sustained without life support at our facilities," said Betsy Hite, an association spokeswoman.

Bernadette Tansey contributed to this report M-mail George Raine at graine@sfchronicle.com

©2001 San Francisco Chronicle Page C - 1

-- Swissrose (cellier3@mindspring.com), May 19, 2001