PG&E warns Calif. power reduction plan is in trouble Monday January 22, 6:32 PM EST By Leonard Anderson

SAN FRANCISCO, Jan 22 (Reuters) - A special program to save precious megawatts of electricity during peak demand days on the chaotic California power grid is in imminent danger of being closed off to the state's energy planners.

San Francisco-based PG&E Corp.'s (PCG) Pacific Gas and Electric unit has quietly warned the California Public Utilities Commission (CPUC) that its program to discount rates up to 20 percent to "interruptible" customers in return for turning off their electricity during supply emergencies is nearly exhausted.

The program, which is also offered by Southern California Edison, a unit of Edison International (EIX), of Rosemead, Calif., can remove about 2,700 megawatts of electricity from the grid during peak demand periods -- especially during summer heat waves -- so the aging system does not collapse.

California power officials, legislators and utilities are struggling to keep electricity flowing in the nation's most populous state. The state has been hit with controlled or "rolling" blackouts in recent days due to a chronic shortage of electricity across Western states.

The problem, Pacific Gas and Electric said in a Jan. 18 letter to CPUC commissioner Carl Wood, is that these customers, typically big industrial and government users, can be interrupted only so many times a year for a set number of hours unless the CPUC changes the terms of the program.

PG&E's annual limit on the number of interruptions, set in tariffs approved by the CPUC, is 30 and the limit on total hours is 100. In only the first three weeks of January, however, the energy crisis has forced the PG&E to turn off the interruptible group 18 times for a total of more than 95 hours per customer.

Southern California Edison's annual program totals 150 hours of interruptions from 25 emergencies, but already in January it has chalked up 12 incidents and 72 hours of power cuts.

The CPUC is examining the interruptibles program and proposals for revising the program are expected by the end of January.

PG&E's letter to Wood said "the current frequency of operation of the program presents significant hardships for these customers and could influence their willingness to participate in similar programs in the future."

PG&E said, however, it is required to comply with orders from the Independent System Operator (ISO), the grid manager for most of California's power system, to cut off the customers.

The utility's program has signed up 165 companies for 2001 representing a total 410 megawatts of electricity, or enough to light up more than 400,000 homes. In 2000, the program included 216 companies and 502 megawatts.

Southern California Edison has 1,500 participants in its 2001 interruptibles program, totaling about 2,200 megawatts, roughly unchanged from last year.

Last summer, the ISO said that without the megawatts saved by the interruptibles program, it would have had to declare its highest emergency order -- Stage Three -- and order rolling blackouts.

Monday was the seventh straight day that the ISO ordered the Stage Three alert, but it did not expect to have to call rolling blackouts.

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-- Martin Thompson (mthom1927@aol.com), January 23, 2001