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Calif. Energy Crisis Spreads Sunday January 28, 11:32 AM EST By James Jelter SAN FRANCISCO (Reuters) - While California's rolling blackouts grab national headlines, the threat of a severe electricity shortage is also fraying nerves and demanding prompt action in neighboring Oregon and Washington.

"The demand for energy has far outgrown supply. It is just as true in the Northwest as it is in California," said John Harrison, a spokesman for the Portland, Oregon-based Northwest Power Planning Commission (NWPPC).

"We're all on the knife's edge. If we have severe weather, which for us means a cold, dry winter, we're in trouble. It's a very precarious balance."

Though most acute in California, the entire region is suffering from the same energy malaise: Rapidly growing populations and robust, computer-driven economies combining to overwhelm what aging local power plants can provide.

Electricity demand throughout the western states has grown by 12,000 megawatts over the past decade, or roughly the amount of energy needed at any given instant to light up 12 million homes.

During that period, only 3,000 megawatts of new generation has been built in the region, shaving to the bone whatever power reserves existed there 10 years ago.

DROUGHT, HEAVY CONSUMPTION DRAIN SUPPLIES

The shortfall is especially critical in the Northwest, where a severe drought and heavy power consumption have drawn down rivers feeding hydroelectric dams that during a normal year would generate 75 percent of the region's power.

Most of that electricity comes from water tumbling toward the Pacific through 31 federal dams managed by the Bonneville Power Administration (BPA), based in Portland, Oregon.

This year, the reservoir behind Grand Coulee, the system's and the nation's biggest dam, is at a 25-year low, the result of rain and snowfall at only 52 percent of normal amounts.

The remaining mix of Northwest power plants, fueled mostly by coal and natural gas, cannot close the gap.

The Northwest rivers, low as they might be, are nevertheless being tapped almost routinely to provide emergency power for California's 34 million residents, some of whom have twice this month seen their power literally run out.

However, California's power woes are benefiting the Northwest and could help it stretch its hydro supplies a bit farther through the summer. Back in November, when California first started crying for help, a deal was struck in which California would send two megawatts of power north for every megawatt that was sent south.

BPA officials call the swap a "win-win" situation, providing desperately needed hydroelectricity to California during the state's peak demand hours during the daytime.

Then at night, when the much chillier Northwest most needs electricity for home heating, California reverses the flow, sending power north and enabling BPA to shut the gates on its dams, holding back water and refilling the reservoirs.

"Before, the flow of power was from the Southwest to the Northwest in the winter months and from the Northwest to the Southwest during the summer, when they need it to meet air conditioning loads," said BPA spokeswoman Dulcy Mahar.

"Today, we don't have any surplus power, so we've come up with this unique plan, accelerating what used to be a seasonal pattern and making it daily or even hourly."

Mahar said the arrangement so far has helped BPA raise the giant Lake Roosevelt reservoir behind Grand Coulee one foot (30 cm), saving enough water to generate the same amount of power it would take a big nuclear plant 10 days to produce.

SEARCH FOR NEW SOURCES

Nevertheless, the Northwest's heavy reliance on hydropower is wearing thin. No new dams have been built there for 25 years and, given environmental concerns, none is likely to be built any time soon.

Washington Gov. Gary Locke last week called for steps to diversify the state's energy portfolio, weaning its nearly 6 million residents from what he warns is an overdependence on hydropower.

Meanwhile, scant supplies and strong demand have pushed wholesale power prices to 10 times their year-ago levels.

Much of the electricity sold in Oregon and Washington comes from municipal power companies forced to pay top dollar on the wholesale market to secure enough power for their customers.

The result is a rise in electricity bills of anywhere from 20 to 80 percent, infuriating consumers and lawmakers alike.

To put a clamp on the runaway market, Gov. Locke, Oregon Gov. John Kitzhaber, and California Gov. Gray Davis earlier this month stood together and demanded the U.S. government impose a region-wide cap on wholesale power prices.

The request has so far been turned down, with newly elected President George W. Bush and Energy Secretary Spencer Abraham arguing that the laws of the marketplace, not price controls, will lead to the best long-term solution to the problem.

SQUARING OFF

That has not dented the governors' convictions that the situation is so dire, and poses such a huge threat to the region's overall welfare, that a price cap is called for.

The issue will be at the center of talks set for Feb. 1 in Portland, where governors Locke and Kitzhaber will meet with secretary Abraham and other top federal energy officials to map out a strategy to ease the enormous strain on the western power grid and bring prices back down to earth.

None of those attending next Thursday's meeting pretend to possess a magic wand that can ease the crisis, and utility industry analysts warn solving the basic supply-demand dilemma could take another two to three years.

Meanwhile, they warn the blackouts that rolled across parts of California this month could easily spread north this summer, when air conditioning demand hits its annual peak in the Southwest, leaving precious few megawatts to go around.

http://money.iwon.com/jsp/nw/nwdt_rt_top.jsp?cat=TOPBIZ&src=202&feed=reu§ion=news&news_id=reu-94082&date=20010128&alias=/alias/money/cm/nw

-- Martin Thompson (mthom1927@aol.com), January 28, 2001