Monday May 7 11:17 PM ET
Blackouts Hit Calif. Again As Rescue Plans Falter

By Andrew Quinn

SAN FRANCISCO (Reuters) - Blackouts flickered across California again Monday as a spring heatwave overwhelmed the state's fragile power grid and politicians scrambled to put together a coherent response to a crisis that seems close to spinning out of control.

Gov. Gray Davis (news - web sites) saw a key part of his rescue package hit a political roadblock, while legislators paved the way for a $13.4 billion bond issue to pay for power -- but one that may take far longer to float than originally hoped. At the Independent System Operator (ISO), officials spent the day nervously eyeing temperatures soaring well into the 90s around the state, boosting demand for air conditioning.

In the late afternoon they were finally forced to order power cut to between 250,000 and 300,000 customers around the state to keep the system from collapsing. Officials say there could be as many as 35 days of blackouts this summer.

While power was restored to all customers after about an hour, ISO officials said high temperatures forecast for the rest of the week could force more outages.

``This is the situation everyone feared. Here it is May 7 and we already have rolling outages,'' said Patrick Dorinson, ISO spokesman. ``We had some conservation but it wasn't enough. We need people to know that we're serious.''

Davis' Utility Rescue Deal In Doubt

Monday's blackouts, the fifth series this year, came as politicians in Sacramento wrestled with a myriad of conflicting policies and pronouncements related to the crisis.

The energy woes of the nation's most populous state stem from a botched 1996 deregulation plan that allowed wholesale energy prices to soar, but capped retail rates.

It has forced the state's largest utility, PG&E Corp. unit Pacific Gas & Electric, into bankruptcy and left its second biggest utility, Edison International 's Southern California Edison (news - web sites), close to the same fate.

Davis had hoped to resolve the crisis by engineering a state purchase of Pacific Gas & Electric's share of the state's extensive transmission grid.

On Monday, Davis' hopes for nailing down a similar deal with Southern California Edison suffered a blow when a key legislator refused to back the plan.

Davis' rescue package, which includes the state purchase of the utility's transmission assets for about $2.76 billion, requires the approval of state lawmakers, but he has been struggling to find anyone to sponsor the legislation.

At a news conference on Monday, Davis said state Sen. Don Perata (D-East Bay) was considering ``carrying'' the legislation. But a spokeswoman for Perata said he had rejected the idea.

Opponents brand the package a ``bailout'' for the utility and many leading Democrats have expressed reservations.

The impasse left Southern California Edison's future in doubt, and threatened to blow yet another hole in Davis' strategy for pulling California back from the brink of an even more complex energy crisis.

Davis said on Monday he was close to reaching a deal with a third California utility, San Diego Gas & Electric, which would involve the state buying its transmission assets.

Biggest Municipal Bond Issue In History

Legislators in Sacramento passed a measure which would pave the way for a $13.4 billion bond issue to replenish state money used to buy power on the utilities' behalf -- what would be the biggest municipal bond issue in U.S. history.

The 49-29 vote in the state Assembly fell short of the needed two-thirds majority needed to pass the bond measure as emergency legislation, meaning the bill will have to wait at least 90 days to take effect as regular legislation.

The state Senate passed another measure which would impose a 100 percent windfall profits tax on generators who charge more for electricity than a certain baseline price, a move aimed at the out-of-state power companies that many Californians believe have used the crisis to gouge their pocketbooks.

``This sends a clear message to electrical suppliers that we are just not going to take this anymore,'' said Democratic Sen. Nell Soto.

-- Anonymous, May 08, 2001

Answers

Tuesday, May 8,2001

Power Cut to Parts of State

Electricity: First blackouts since March may be the beginning of warm-weather outages, industry officials warn.

By MITCHELL LANDSBERG and KAREN ROBINSON-JACOBS, Times Staff Writers

The dreaded summer of 2001 cast its shadow over California on Monday as an early spate of hot weather forced an hour of scattered, statewide electrical blackouts--a precursor of what could be a difficult season ahead.

With more warm weather expected today and tomorrow, state power officials warned that more blackouts might be necessary before an expected cooling trend later in the week. And they acknowledged that this could be the start of a long, dark summer.

"I hate to be the bearer of bad news," said Ed Riley, a spokesman for the agency that operates the statewide electrical grid, "but yeah, this is the start."

The blackouts, the first since March, were triggered at 4:45 p.m. after a day in which the California Independent System Operator struggled to patch together enough electricity to keep the grid running without outages. That worked for most of the day, but finally a combination of warm weather and power plant outages proved to be too much for the grid jockeys, and they were forced to order the hourlong blackouts, which affected about 100,000 residential, industrial and commercial customers.

The customers hit by the outage were those served by the state's three largest private utilities--Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric--plus a number of people served by municipal utilities in Pasadena and Vernon.

As has been the case throughout the power crisis, which began last summer, customers of the municipally owned Los Angeles Department of Water and Power were spared. The DWP operates independently of the statewide grid.

State officials have been warning for months that this summer would probably bring frequent blackouts. Demand for electricity in California has far outstripped the supply, and the state's ability to import power from elsewhere in the West has been limited by a drought in the Pacific Northwest, which relies heavily on hydroelectricity, and by prices that have soared beyond the reach of the private utilities.

The heat that triggered Monday's blackouts was far from the hottest that can be expected this summer. Temperatures ranged from the 70s along the Southern California coast to 80 degrees in downtown Los Angeles, 95 degrees in Northridge and Sacramento, and a statewide high of 104 degrees in Palm Springs.

However, there also were more power plants out of service than officials hope will be the case this summer. In all, about 12,500 megawatts of power were unavailable, mostly because of planned outages for maintenance. That amounts to about one-quarter of the state's peak summer demand for power.

California uses more electricity in the summer because air conditioners require vast amounts of power. Power officials said the latest blackouts were an ominous sign.

"This is probably typical of what we'll see this summer, but I would say this was a less than full experience," said Dick Rosenblum, Edison senior vice president for distribution and transmission.

"Here we go," said Michael Zenker, California director of Cambridge Energy Research Associates, a Massachusetts energy consulting firm. "This is a bad omen for how bad the situation is."

Rosenblum said about 34,000 Edison customers lost power during the blackouts. They were scattered across Edison's 50,000-square-mile territory, and included such communities as Irvine, Barstow, Santa Monica, Long Beach and Inglewood, he said.

The blackouts also affected about 54,000 PG&E customers scattered through Northern and Central California, and about 8,600 customers of SDG&E in parts of San Diego and Orange counties.

As is typical in such blackouts, the utilities received only a few minutes' warning from Cal-ISO before they had to pull the plug.

No serious incidents were reported. "People are starting to get the hang of this," observed Tustin Police Lt. Mike Shanahan, who said he was pleasantly surprised at the ease with which drivers in his Orange County community began treating blacked-out signals as four-way stops.

The blackouts came slightly more than two hours after Cal-ISO officials expressed cautious optimism that they might squeak through the day. Worries in the morning had eased when the state received 1,000 megawatts from a Canadian supplier, and when "interruptible" customers--those who agree to occasionally shut off power in exchange for lower rates--came through when asked.

Riley guessed that the late-afternoon shortage occurred when the interruptible customers turned their power back on. In the past, he said, such customers--usually large businesses and institutions--typically quit work for the day rather than wait around to turn the power back on.

"For some reason today, some of that load came back," Riley said.

He said it was difficult to immediately determine the extent to which Californians were conserving electricity, and whether poor conservation efforts could be blamed for the blackouts.

Gov. Gray Davis has been exhorting Californians to conserve energy as part of a multi-pronged--and hotly contested--state strategy to cope with power shortages and exorbitant prices.

On Monday, speaking at a news conference in Los Angeles, Davis thanked President Bush "for what he has done to date"--a rare bouquet--but was clearly critical of recent comments made by Vice President Dick Cheney that energy prices should not be capped or regulated under any circumstances, even if the problem threatens the nation's economy.

"By far the most important thing that the federal government could do for us is to moderate prices, which are staggering," Davis said. He said it would be a "grave mistake" for the Bush administration to "rigidly adhere to ideology even if it meant hardship for California."

Also Monday, Davis said he anticipates that a deal to purchase the transmission system of San Diego Gas & Electric "will be resolved before the week is out." He has offered more than $7 billion to buy the transmission systems of SDG&E, Edison and PG&E. So far, only Edison has accepted the deal. PG&E's ability to sell its grid has been complicated, if not thwarted, by the company's decision to file for protection in federal Bankruptcy Court.

Davis has faced difficulty at every turn attempting to rescue the state's electrical system while staying afloat in a political tar pit.

The latest setback took shape over the past few days as chief executives of several independent power companies turned down the governor's invitation to a meeting in his office on Wednesday. Davis had sent out the invitations to a dozen chief executives last week. Most responded by offering to send lower-ranking officers.

Davis has relentlessly attacked independent generators, refusing to let up even as he invited them.

"I'm going ask these generators, who have made more money than God sucking money out of California and taking it back to Texas and other Southwest states, to reduce the cost of power for this summer, and to reduce the claims they have on us for money the utilities owe," he said.

In declining the invitation, Stephen Bergstrom, president and chief operating officer of Dynegy Inc. of Houston, wrote: "We are greatly disturbed by the increasingly virulent rhetoric that is coming from Sacramento."

Also Monday:

* Democratic lawmakers announced in Sacramento that they are suing the Federal Energy Regulatory Commission to compel the agency to cap wholesale electricity prices. The agency recently ordered a limited cap, but the legislators said it was not enough.

* The state Senate voted to impose a special tax on the "windfall" profits of energy producers whose earnings have soared astronomically during the last year. The resulting revenue would be returned to income taxpayers in the form of a credit.

* Frustrated by a Republican roadblock, Democratic legislators pushed forward with a parliamentary maneuver to reimburse the state budget for billions in electricity purchases--a last-gasp move that will effectively delay repayment until August.

---

Times staff writers Miguel Bustillo, Carl Ingram, Dan Moran and Julie Tamaki in Sacramento, Robin Fields, Geoff Mohan, Nancy Rivera Brooks in Los Angeles, John Glionna in San Francisco, Tony Perry in San Diego, Scott Gold in San Bernardino and Deanne Brandon in Orange County contributed to this story.

-- Anonymous, May 08, 2001

All this time I have heard of NO real plan for having the people of CA reduce their electricity usage. I am sure the working class has only because of the high costs and they can't afford it, but the vast majority of upper middle and well to do probably haven't and I really haven't heard of any businesses cutting usage. Of course maybe none of this is mainstream news either. But back when there was fuel shortage, I remember having thermostats set lower in winter and higher in summer, having businesses turn out every 2nd or 3rd light set, etc. etc.

Also when CA had the chance to do something about their faulty de- regulation, they chose not to.

Oh and I can see this windfall profits tax working well - these out- of state power companies may decide to sell elsewhere.

-- Anonymous, May 08, 2001

Beckie, you have pointed out a most bizarre aspect of the situation.

Maybe Carl can shed some light on that. LOL [so punny!]

-- Anonymous, May 08, 2001

The lack of simple conservation measures boggled my mind when the crisis hit the first time. California was in the midst of a second or third set of rolling blackouts and people interviewed were saying, well, I guess I ought to start turning off lights in rooms I don't use. Maybe there's a disconnect(no pun intended) somewhere--an undeveloped sense of consequence. (There's that phrase again.)

-- Anonymous, May 08, 2001

Personally, I am absolutely fascinated with the California situation. And glad I'm not living out there right now. The political blunders are almost unbelievable. Shows us all how incapable the government is in addressing really serious issues in an intelligent and timely way.

But even more so, I have the feeling that the California situation could be the catalyst for energy changes across the nation, after there are some really serious blackouts on a continuing basis as the summer heat presents more and more problems. There are a lot of businesses that are totally dependent on air conditioning and will not be able to function properly if they can't control the heat inside.

I keep reading about some rather extraordinary energy technology that has been kept under wraps by big industry since it threatens the past power/wealth of the oldest energy businesses such as oil and gas. If the situation truly gets out of hand in California first, then begins spreading to other areas, there may be some release of new technology information as the only viable way to supply our growing demands.

-- Anonymous, May 08, 2001

I hope you're right Gordon, and we do get some decent, not polluting, inexpensive power technology. I just hope it doesn't take too long to implement it.

The vast resources of power ust in our atmosphere, the sunshine pouring down 12 hours or so a day in most every spot on the planet, and we are not tapping even one half a percent of it. I'm sure that any aliens that are watching us are thinking we are idiots. And they would be right to think so.

I should talk! I have no solar panels, and no windmill. electric thru and thru. But we have plans, and as soon as we have the money for it, the roof is going to be our power source, and we will collect what water we need into holding tanks [fish ponds] from the runnoff of the roof. I haven't checked on the zoning rules to see if the windmill is allowed, but then it doesn't have to be very tall. I could set up three or four at about six foot high and they would get enough wind to spin.

just gotta get me some money is all! LOL But isn't that what the power companies are saying too?

-- Anonymous, May 08, 2001

Solar and wind are not the answer really. They work, but not very well and not all the time. The technology I was referring to is extraction of the electrical energy that is all around us, all the time. Just watch the amount of electric energy that is released by a good thunderstorm for starters.

-- Anonymous, May 08, 2001

Don't forget the graph for the system stats.

It can be found here.

Currently,12:15 cst, it appears that they just went a little above their expected usage. Wonder when the black-outs will begin today?

-- Anonymous, May 08, 2001

Unfortunately, what grey has done is to continue to mix the twin issues of price and capacity. This is an expedient move POLITICALLY for him, as the PRICE is what the people see day to day, in their bills. the SUPPLY is something no-one sees until there is a black- out.

Should someone actually speak the truth in Kali about the CAPACITY crisis, and its solutions, they are shouted down by the Greens who have successfully trumpeted their NIMBY philosophy for so long.

I am ETERNALLY glad I do NOT live in Kail, and that my electricity is generated by two of the three most efficient methods, Coal and Nuclear.

Chuck

-- Anonymous, May 08, 2001

Neat graph, Sheeps. Interesting how there was a small spike from the expected right between 11:30 and noon--I guess nobody is substituting salads or sandwiches for lunch.

-- Anonymous, May 08, 2001

Grey keeps bleating about the price-goudging out-of-state energy providers....who are not in his state, therefore not in his control, and may pick up their marbles in high dudgeon and tell him they have to sell electricity to their home states first. Bluster and insult are not the way to get more energy for Cali. This stupid man is digging a lot of people's graves with his tongue.

-- Anonymous, May 08, 2001

What you are hearing coming out of the California government right now is the squeal of pigs at the public trough that are scared that something out of their control is going to slaughter them. They're right!

-- Anonymous, May 09, 2001