Thursday February 15 3:44 PM ET Hard to Pin Blame for Plant Shutdowns

By David Howard Sinkman

NEW YORK (Reuters) - However history judges California's electricity crisis, currently it looks like a whodunit with an illusive villain behind the sporadic power cuts plaguing the richest U.S. state the past two months.

Consumer advocates and some politicians accuse the utilities, many of them out-of-state, of manipulating the newly deregulated power market by shutting down power plants for maintenance in order to drive up prices.

The power producers vehemently deny these accusations, saying that the fault lies with old plants driven past breaking point by energy-hungry California. The plants have had to be taken out for urgent maintenance, the companies argue.

Given these entrenched positions and a lack of public information, finding out what has really been going on is far from easy, analysts and consultants say.

``It is impossible to determine whether a declared forced outage occurs because the plant is actually unable to operate or because this action increased the firms' profits,'' said Stanford University Economics Professor Frank Wolak, a member of California's market-monitoring Independent System Operator (ISO).

Certainly, figures show that power producers have taken down more of California's capacity to produce electricity in the past year than in the previous 12 months.

In August, for example, 3,391 megawatts of capacity was out of service in the most populous U.S. state, a 461 percent increase from the previous August. Wholesale prices have spiked as well, with the value of electricity sold in California in 2000 almost quadrupling to $27.97 billion from $7.43 billion in 1999.

And, consumer groups point out, California was able to meet demand of 45,000 megawatts last summer, but now, in the low-demand winter months, the state is suffering from rolling blackouts even though demand is less than 30,000 megawatts.

Up to 13,000 megawatts of Californian capacity was off-line in January for undisclosed reasons, consumer advocacy group Public Citizen said.

Plant maintenance typically is carried out in the winter because that is when demand is lowest. Some plant outages, such as at certain units of Duke's Moss Landing plant, are linked to extensive upgrades required to meet strict emission standards.

No Evidence Of Manipulation

The Federal Energy Regulatory Committee (FERC) says there is no evidence of manipulation by the producers. It reported Feb. 1 that plant outages in California beginning on Dec. 13 were due to maintenance problems at old plants that were run too hard in the summer.

But, critics note, FERC conducted 60 percent of its audits of California power plant outages over the telephone using questionnaires. ``FERC's inspection was like a principal calling a kid who is cutting school and asking if he is sick,'' said Mindy Spatt, media director of The Utilities Reform Network (TURN) consumer group.

Under political pressure, ISO, the traffic controller for 75 percent of the state's energy demands, began releasing daily data on the size of plant outages on Jan. 25, but not the reason why.

``Because details on why these plants are off-line is confidential, the public is literally left in the dark,'' said Wenonah Hauter, Public Citizen's director of energy programs.

Confusion over responsibility for the power shortages has also increased in recent weeks because some power producers have been reluctant to sell electricity to California's two main utilities, Southern California Edison (news - web sites), a unit of Edison International (NYSE:EIX - news), and PG&E Corp. (NYSE:PCG - news), amid fears that they will not be able to pay for it.

With so little transparency, the allegations of manipulation thrown against the producers have been flying thick and fast.

``The companies are playing with marked cards. I think consumers know when they are being conned,'' said San Francisco City Attorney Louise Renne, who is suing 13 power generating companies on behalf of the citizens of California.

The producers are just as vehement in their response.

``Quite honestly, it is getting offensive,'' said Cathy Roche, director of external relations at Duke Energy Corp. (NYSE:DUK - news), which has 3,350 megawatts of generating capacity in the state. ``The public and politicians wanted a villain, but they picked the wrong one.''

Not Just California

Incomplete information about the causes behind individual plant shutdowns and soaring wholesale energy prices is not just a California problem.

In New England, the average amount of generating capacity out of service each weekday rose by 47 percent in the 12 month period following deregulation in May 1999, said the Union of Concerned Scientists (UCS), an environmental advocacy group.

These outages have contributed to increased price volatility and higher average monthly prices, UCS said.

``By declaring some of its plant unable to run, a firm can create an artificial scarcity of generation capacity,'' said Wolak. ``The generating firm is then able to set a very high market clearing price which is earned by all of its operating units.''

But without specific plant and supplier date data, the UCS said it is not yet possible to determine definitively whether generators are withholding capacity to raise prices.

What is needed in California and New England is a full investigation plant by plant for the reason why sites were shut down or operating at less than full capacity, said David Schlissel of Synapse Energy Economist Inc., an energy research and consulting firm. He added that full disclosure of FERC's data and past figures would help explain any outage abnormalities.

Some academics say the whole transparency argument is rubbish -- there simply is insufficient capacity to meet rising demand.

``When you have an old car that you run too hard it breaks down,'' said Michael Economides, chemical engineering professor at the University of Houston.

http://dailynews.yahoo.com/h/nm/20010215/bs/california_villain_dc_1.html

-- Tess (webwoman@iamit.com), February 15, 2001

Answers

Why was the electric grid subjected to experimental changes in the face of the known Y2K Bugs? Many computer systems were "locked down" for Y2K remediation, which, in retrospect, largely explains why those systems survived Y2K relatively unscathed. The electrical grid control systems were not likewise locked down for Y2K, but were modified and tinkered with, to enable "deregulation" experiments. This is likely one of the main reasons why electric power generation and transmission is one of the "low lying areas" of the Navy War College Y2K Bug "Flood" scenario. And now the Y2K Bugs are starting to bite hard. The second leap year date "Y2K+1" bug, when some systems rolled from day365yr00 to day001yr01, (failing to recognize day366yr00), was the failure "wave" that "broke the camel's back".

-- Robert Riggs (rxr.999@worldnet.att.net), February 16, 2001.

Robert, "Many computer systems were "locked down" for Y2K remediation, which, in retrospect, largely explains why those systems survived Y2K relatively unscathed". I agree and see the point...

And also, yes, I totally agree that we can all now see the Y2K Bugs are starting to bite hard..

So true....

But do please give me some more info on what you said about the leap year...I am intrigued by this but my brain is on backlog or something LOL! "The second leap year date "Y2K+1" bug, when some systems rolled from day365yr00 to day001yr01, (failing to recognize day366yr00), was the failure "wave" that "broke the camel's back".

-- Tess (webwoman@iamit.com), February 17, 2001.