Message-ID: <15166928.1075860398327.JavaMail.evans@thyme> Date: Wed, 21 Mar 2001 02:34:00 -0800 (PST) From: miyung.buster@enron.com To: ann.schmidt@enron.com, bryan.seyfried@enron.com, dcasse@whwg.com, dg27@pacbell.net, elizabeth.linnell@enron.com, filuntz@aol.com, james.steffes@enron.com, janet.butler@enron.com, jeannie.mandelker@enron.com, jeff.dasovich@enron.com, joe.hartsoe@enron.com, john.neslage@enron.com, john.sherriff@enron.com, joseph.alamo@enron.com, karen.denne@enron.com, lysa.akin@enron.com, margaret.carson@enron.com, mark.palmer@enron.com, mark.schroeder@enron.com, markus.fiala@enron.com, mary.hain@enron.com, michael.brown@enron.com, mike.dahlke@enron.com, mona.petrochko@enron.com, nicholas.o'day@enron.com, paul.kaufman@enron.com, peggy.mahoney@enron.com, peter.styles@enron.com, richard.shapiro@enron.com, rob.bradley@enron.com, sandra.mccubbin@enron.com, shelley.corman@enron.com, stella.chan@enron.com, steven.kean@enron.com, susan.mara@enron.com, mike.roan@enron.com, alex.parsons@enron.com, andrew.morrison@enron.com, lipsen@cisco.com, janel.guerrero@enron.com, shirley.hudler@enron.com, kathleen.sullivan@enron.com, tom.briggs@enron.com, linda.robertson@enron.com, lora.sullivan@enron.com, jennifer.thome@enron.com Subject: Energy Issues Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: quoted-printable X-From: Miyung Buster X-To: Ann M Schmidt, Bryan Seyfried, dcasse@whwg.com, dg27@pacbell.net, Elizabeth Linnell, filuntz@aol.com, James D Steffes, Janet Butler, Jeannie Mandelker, Jeff Dasovich, Joe Hartsoe, John Neslage, John Sherriff, Joseph Alamo, Karen Denne, Lysa Akin, Margaret Carson, Mark Palmer, Mark Schroeder, Markus Fiala, Mary Hain, Michael R Brown, Mike Dahlke, Mona L Petrochko, Nicholas O'Day, Paul Kaufman, Peggy Mahoney, Peter Styles, Richard Shapiro, Rob Bradley, Sandra McCubbin, Shelley Corman, Stella Chan, Steven J Kean, Susan J Mara, Mike Roan, Alex Parsons, Andrew Morrison, lipsen@cisco.com, Janel Guerrero, Shirley A Hudler, Kathleen Sullivan, Tom Briggs, Linda Robertson, Lora Sullivan, Jennifer Thome X-cc: X-bcc: X-Folder: \Mary_Hain_Aug2000_Jul2001\Notes Folders\Discussion threads X-Origin: Hain-M X-FileName: mary-hain.nsf Please see the following articles: AP Wire services, Tues 3/20: "Calif. Officials Order Blackouts" Dow Jones News, Tues 3/20: "California Panel to Order Utilities to Make $1= =20 Billion in Back Payments" SF Chron, 3/20: "As Davis Seeks Money, Lawmakers Want Answers=20 Members of both parties angry at lack of dialogue" Fresno Bee, Tues 3/20: "Jones rips state on energy crisis " Sac Bee, Wed., 3/21: "Day 2 -- Battling blackouts: Payment plan sought to= =20 restart small plants" Sac Bee, Wed., 3/21: "Hospitals take hit, seek power guarantee" Sac Bee, Wed., 3/21: "Lodi still won't pull the plug" San Diego Union, Tues., 3/20: "Blackouts hit for second day; break seen=20 Wednesday" San Diego Union, Tues., 3/20: "State power regulators working on energy=20 rescue"=20 San Diego Union, Tues., 3/20: "Federal regulators scored for not ordering= =20 more California refunds" LA Times, Wed., 3/21: "Second Day of Blackouts Disrupts 500,000 Home and= =20 Businesses" LA Times, Wed., 3/21: "Fragile Supply Network Apt to Fail" LA Times, Wed., 3/21: "Elevator Anxiety is Riding High" LA Times, Wed., 3/21: "State says it's accelerating plan to buy Power=20 Utilities' Grid" LA Times, Wed., 3/21: "L.A., Long Beach File Suits Over Gas Companies'=20 Prices " LA Times, Wed., 3/21: "Davis OKs Subsidy of Pollution Fees" LA Times, Wed., 3/21: "As Losses Mount, Companies work around outages" LA Times, Wed., 3/21: Commentary: "A Blackout on Answers" LA Times, Wed., 3/21: Commentary: "Rolling Blackouts: Blatant Extortion" SF Chron, Wed., 3/21: "Utilities' Demand Blocks Bailout=20 NEGOTIATIONS HIT SNAG: PG&E, Edison want end to price freeze if they sell= =20 transmission lines to state" SF Chron, Wed., 3/21: "Utilities' Demand Blocks Bailout=20 BLACKOUTS ROLL ON: Weather, increased consumption blamed" SF Chron, Wed., 3/21: "Manners Go Out the Window=20 Pedestrians in peril as drivers turn darkened S.F. streets into free-for-al= l" SF Chron, Tues., 3/20: "Historic Blackouts in State=20 Bay Area learns to cope" SF Chron., Tues., 3/20: "Second day of rolling blackouts in power-starved= =20 California" Mercury News., Wed., 3/21: "Bay Area Residents Learning to roll with=20 Blackouts" Orange County, Wed., 3/21: "Powerless, Again" Orange County, Wed., 3/21: "The iceman shunneth effects of hourlong blacko= ut" Orange County, Wed., 3/21: "Traffic officials are seeing red over blackout= s" Orange County, Wed., 3/21: "Alternative power producers cut back or shut= =20 down as payments from big utilities lag" Orange County, Wed., 3/21: "O.C. saves its energy -- for blaming others" Orange County, Wed., 3/21: "Blackout readiness on agenda" Dow Jones Energy News, Wed., 3/21: "Calif To Order Utils To Pay Small=20 Generators Up Front-Gov" Dow Jones Energy News., Wed., 3/21: "PG&E Says It Is Negotiating With=20 Qualifying Facilities" Energy Insight, Wed., 3/21: "New York at the Crossroads" ---------------------------------------------------------------------------= --- -------------------------------------------------------------- Calif. Officials Order Blackouts=20 By PAUL CHAVEZ, Associated Press Writer=20 LOS ANGELES (AP) - State power managers ordered rolling blackouts across=20 California for a second straight day Tuesday as demand for electricity agai= n=20 exceeded supply.=20 The same factors that collided to strap California's power supply on Monday= =20 hit again, officials with the Independent System Operator said. Those inclu= de=20 reduced electricity imports from the Pacific Northwest, numerous power plan= ts=20 offline for repairs and higher-than-expected demand because of warm=20 temperatures.=20 A two-unit Southern California plant that the ISO hoped would be working=20 Tuesday had not been fixed. One of its units might go online at noon to hel= p=20 the situation, the ISO's Jim Detmers said.=20 In addition, hydroelectric power imports from the Northwest were 800=20 megawatts lower than Monday, he said. The ISO oversees most of the state's= =20 power grid.=20 ---------------------------------------------------------------------------= --- --------------------------------------------------------------------------- California Panel to Order Utilities to Make $1 Billion in Back Payments By Jason Leopold 03/20/2001 Dow Jones Business News (Copyright (c) 2001, Dow Jones & Company, Inc.) Dow Jones Newswires=20 LOS ANGELES -- The California Public Utilities Commission will order Edison= =20 International's Southern California Edison and PG&E Corp.'s Pacific Gas &= =20 Electric unit to pay small power generators that are qualified utilities=20 about $1 billion in past-due payments in order to keep the plant owners fro= m=20 dragging the utilities into an involuntary bankruptcy proceedings, and to= =20 also ensure the generation units keep pumping out electricity, people=20 familiar with the matter told Dow Jones Newswires late Monday. Gov. Gray Davis, state Sen. Debra Bowen, and Assemblymembers Fred Keeley an= d=20 Robert Hertzberg, all Democrats, spent most of the day y trying to hammer o= ut=20 an agreement with the so-called qualifying facilities, alternative power=20 producers that use the wind, sun, steam and biomass to generate electricity= =20 for the state, on supply contracts and past payments the utilities failed t= o=20 make.=20 The qualifying facilities, which represent about one-third of the state's= =20 total power supply and signed contracts to sell power directly to the=20 utilities under a government mandate, would then agree to sign power-supply= =20 contracts with the utilities for a period of five to 10 years for about $79= a=20 megawatt hour for the first five years and about $61 a megawatt hour=20 thereafter, two sources involved in the negotiations said.=20 The PUC is expected to issue a draft resolution on the issue sometime this= =20 week, one source said.=20 The lawmakers wouldn't comment on the details of their talks Monday.=20 Representatives with SoCal Ed (EIX) and PG&E (PCG) said they were unaware= =20 Gov. Davis and his administration were meeting on the issue.=20 The utilities are more than $13 billion in debt and have failed to make=20 payments on their qualifying-facilities contracts since November. PG&E has= =20 paid some of its qualified facilities just a fraction of what they are owed= .=20 Legislation To Restructure QF Rates Stalls In Senate Energy Committee=20 Mr. Keeley had recently drafted legislation, along with state Sen. Jim=20 Battin, a Republican from Palm Desert, that would have restructured the rat= es=20 the qualified facilities charge the utilities, from $170 a megawatt hour to= =20 $80 a megawatt hour for five years.=20 The bill, SB47X, stalled in the Senate Energy Committee, of which Ms. Bowen= =20 chairs. SoCal Ed opposed the legislation, saying the rates were still too= =20 high. A utility spokesman said the qualified-facilities rates should be=20 reduced to under $50 a megawatt hour.=20 But the lawmakers and the governor is trying to avoid the need for=20 legislation, largely because there isn't much support in both houses for su= ch=20 a bill and the chance that it won't be passed in time to keep the qualified= =20 facilities from dragging the utilities into involuntary bankruptcy=20 proceedings, the legislative source said.=20 The PUC will take over the issue from the Legislature, the source said.=20 Monday, about 3,000 megawatts of qualified-facilities generation went offli= ne=20 because the companies that operate the power plants can no longer afford to= =20 buy natural gas used to fuel the plants due to the utilities' failure to pa= y=20 money owed to the companies, said Jim Detmers, vice president of operations= =20 for the state's Independent System Operator.=20 The outages triggered a major shortfall in the state which resulted in near= ly=20 eight hours of statewide rolling blackouts Monday.=20 Many owners of the qualified-facilities said without immediate relief, they= =20 would likely force SoCal Ed, and possibly PG&E, into involuntary bankruptcy= ,=20 perhaps as soon as Thursday.=20 One such facility, CalEnergyOperating Co., wants to be freed temporarily fr= om=20 its contract with the utility and be allowed to sell its electricity to thi= rd=20 parties until the utility is able to pay its bills. CalEnergy is an affilia= te=20 of MidAmerican Energy Holdings Co., which is majority owned by Warren=20 Buffet's Berkshire Hathaway Inc. (BRKA).=20 The company sued SoCal Ed last month, and the case is scheduled to be heard= =20 Thursday in Imperial County Superior Court. If a judge delivers an=20 unfavorable ruling, CalEnergy and other unsecured creditors would drag SoCa= l=20 Ed into involuntary bankruptcy, three executives with the companies involve= d=20 said.=20 CalEnergy is said to be organizing a bankruptcy petition now circulating=20 among six of Southern California Edison's independent power suppliers and= =20 could file the petition very quickly if it fails in its suit Thursday, said= =20 executives with three of the six companies.=20 Write to Jason Leopold at jason.leopold@dowjones.com=20 Copyright (c) 2001 Dow Jones & Company, Inc.=20 All Rights Reserved ---------------------------------------------------------------------------= --- ---------------------------------------------------------------------------= --- -------------------------------------------------------------------------- As Davis Seeks Money, Lawmakers Want Answers=20 Members of both parties angry at lack of dialogue=20 Lynda Gledhill, Greg Lucas, Chronicle Sacramento Bureau Tuesday, March 20, 2001=20 ,2001 San Francisco Chronicle=20 Sacramento -- The Legislature has warned it may block further state purchas= es=20 of electricity as lawmakers' frustration with Gov. Gray Davis' handling of= =20 the energy crisis increases.=20 A test may come soon because Davis asked yesterday for another $500 million= =20 to continue buying power.=20 Sen. Steve Peace, D-El Cajon, chairman of the Joint Legislative Budget=20 Committee, wrote to Davis' Finance Department on Friday that the committee= =20 might deny further spending requests "in the absence any discernable=20 progress" from the Public Utilities Commission to ensure that the state wou= ld=20 get its money back.=20 Members of the committee, both Republican and Democratic, said they support= ed=20 Peace's call for more oversight of the spending, given the lack of=20 information from Davis on details of the state's power purchases.=20 "He's been holding things close to the chest, and that bothers me," said Se= n.=20 John Vasconcellos, D-Santa Clara. "I want to know a lot more."=20 Sen. Dick Ackerman, R-Fullerton, said the administration "has been=20 stonewalling us about how much is being spent, and how much power we're=20 getting for it. When the state is spending that kind of money, at a minimum= ,=20 legislators should know for what."=20 The state had spent $2.6 billion on electricity through March 11. Davis'=20 request for more money would put the state at the $3 billion mark by the=20 middle of April. The state is spending an average of $49 million a day.=20 The money is supposed to be paid back through the rates collected from=20 utilities' customers. It is up to the PUC to decide how to divide that mone= y=20 among the state, the utilities and the utilities' debtors. The commission i= s=20 scheduled to take up the issue at its March 27 meeting.=20 The problem is that there appear to be more demands on the money than there= =20 is money to go around.=20 The utilities have said they need the money to pay off some of their=20 creditors. Among those looking for cash are alternative-power generators th= at=20 were selling electricity to Pacific Gas and Electric Co. and Southern=20 California Edison. Half of them have shut down because they have not been= =20 paid.=20 Earlier this month, the PUC granted the Department of Water Resources, whic= h=20 has been purchasing electricity for the state, the power to recoup its full= =20 costs through rates.=20 It's unclear whether that can be accomplished without raising electricity= =20 prices, though Davis has insisted he can solve the crisis without boosting= =20 rates.=20 Lawmakers said they approved the bill that allowed the state to buy power i= n=20 the belief such purchases would be a stopgap until the Davis administration= =20 could sign long-term contracts with power suppliers. However, only about 19= =20 contracts have been signed to date, out of 42 agreements. If all the=20 contracts are signed, they will account for about 70 percent of the power= =20 California is expected to need.=20 "It was our expectation some of these contracts would kick in," said=20 Assemblywoman Carole Migden, D-San Francisco. "This was designed to only be= =20 bridge money to avert a power disaster. We should hold firm and come up wit= h=20 a plan.=20 "I recall about three weeks ago when we first asked about one of these $500= =20 million letters," Migden said. "We said maybe this one is necessary, but=20 there won't be carte blanche approval of any future requests. I'm pleased= =20 Sen. Peace is taking that approach."=20 To Assemblyman George Runner, R-Lancaster, Peace's letter was "another way= =20 for the Legislature to send a message we need to be in this loop. We're jus= t=20 getting a small little dribble of information, which just creates more=20 questions."=20 A spokesman for the Department of Finance said officials hoped to work with= =20 the committee members about their concerns.=20 ---------------------------------------------------------------------------= --- ---------------------------------------------------------------------------= --- -------------------------------------------------------------- Jones rips state on energy crisis=20 Secretary of state hints that he'll take on Davis in 2002.=20 By John Ellis=20 The Fresno Bee (Published March 20, 2001)=20 Officially, he's Bill Jones, secretary of state for California. Unofficiall= y,=20 he's Bill Jones, 2002 gubernatorial candidate.=20 The evidence is right there between the lines -- in the subtleties of his= =20 speeches, their subject matter, and the way Jones carries himself when he's= =20 in public.=20 Monday was no different, as Jones addressed a Rotary Club luncheon in Fresn= o=20 full of people who are assuming -- though nothing is official -- that the= =20 Fresno native will soon announce his intention to challenge Gov. Davis next= =20 year.=20 "Bill, they call me governor," Chas Looney, a former Rotary Club district= =20 governor, quipped to Jones. "I look forward to the day we all can call you= =20 governor."=20 Jones then proceeded to deliver a speech to a packed house in the DoubleTre= e=20 Hotel that touched on his accomplishments as secretary of state, but quickl= y=20 moved to his main topic: California's crumbling infrastructure and how the= =20 energy crisis is affecting the state.=20 Always in the background but never mentioned by name was Davis. Jones was= =20 careful to hew to the Rotary rule that speeches steer clear of partisan=20 politics.=20 Still, Jones looked, sounded and acted like a candidate for governor, and= =20 near the end of his speech he promised his decision would come soon.=20 The Fresno Republican's speech began by highlighting his work in passing th= e=20 "Three Strikes and You're Out" initiative in 1994.=20 Jones also talked of his efforts to remove 2 million inactive California=20 voters from the rolls.=20 But it was clearly the energy crisis and its ramifications -- an issue=20 Republicans feel they can pin on Davis and the Democratic-controlled=20 Legislature -- that was the centerpiece of the speech.=20 Today, the energy crisis is being driven, he said, by a lack of power plant= =20 construction. And while billions go to solve the crisis, he said, the state= =20 faces $100 billion in unmet infrastructure needs -- everything from school= =20 repair to road repair.=20 "Doesn't that scare you?" Jones asked.=20 He then recounted the warning signs -- ignored by the state, he said -- of= =20 the looming energy crisis.=20 He cited the initial warnings that the deregulation bill was flawed, last= =20 summer's request by Edison and Pacific Gas & Electric to allow forward=20 contracting and the Republican request for a special session to deal with t= he=20 energy crisis. All ignored, Jones said.=20 Now, Edison and PG&E are near bankruptcy and the state finds itself steppin= g=20 up as a creditor. "And the solution now becomes California getting into the= =20 energy business," he said. "Or, even carrying it to a greater degree, not= =20 just in the short term to buy power to keep the lights on. I'm talking abou= t=20 basically socializing the energy business."=20 Jones said he prefers low-interest loans to Edison and PG&E, taking the=20 electric grid as collateral.=20 "I just do not believe in California getting into something it does not kno= w=20 how to do -- has never done before -- on top of all of our other=20 obligations," he said.=20 "It really worries me that California will not be able to endure that type = of=20 obligation."=20 Jones said polls now show increasing numbers of residents saying the state = is=20 headed in the wrong direction.=20 "I feel obligated to speak out and say there is a better way," Jones said. ---------------------------------------------------------------------------= --- ---------------------------------------------------------------------------= --- -------------------------------------------------------------------------- Day 2 -- Battling blackouts: Payment plan sought to restart small plants By Dale Kasler and Carrie Peyton Bee Staff Writers (Published March 21, 2001)=20 Blackouts rolled across California for a second straight day Tuesday,=20 snarling traffic, darkening businesses and sending state officials scrambli= ng=20 to craft a payment plan to revive the wind farms and other critically neede= d=20 small energy producers that have shut down because of financial woes.=20 On a day when another 570,000 customers lost power, Gov. Gray Davis said th= e=20 Public Utilities Commission and the Legislature would move promptly to orde= r=20 Pacific Gas and Electric Co. and Southern California Edison to start paying= =20 those small energy producers for their electricity. Davis said the two=20 utilities will face "considerable fines" if they don't pay up.=20 But several of the producers, known as "qualifying facilities," said they= =20 doubted Davis' plan would go far enough to get them back in operation. And = it=20 wasn't clear whether the plan would keep the increasingly impatient=20 alternative producers from hauling one or both of the big utilities into=20 bankruptcy court, as some have threatened.=20 The shortage of power from the qualifying facilities -- plus a near-record= =20 heat wave (downtown Sacramento topped off at 83 degrees, one degree short o= f=20 the 84 degree record set in 1960), a lack of hydropower and other problems = --=20 prompted the state's Independent System Operator to order a second day of= =20 blackouts starting mid-morning. But the blackouts hit only about half as ma= ny=20 Californians as Monday's, with late afternoon conservation efforts helping= =20 balance supply with demand.=20 The blackouts, usually about an hour long, hit about 7,600 Sacramento=20 Municipal Utility District customers in Elk Grove and south Sacramento=20 County. PG&E customers in suburban counties were affected as well.=20 The order darkened shops in San Francisco's Chinatown and was blamed for a= =20 crash that left two motorists seriously injured in the Los Angeles suburb o= f=20 South El Monte. A Sun Microsystems Inc. factory in Newark had to close for= =20 several hours.=20 Most Californians took the blackouts in stride, though. Elk Grove High Scho= ol=20 students filed outside to play hacky sack. Coffee shop patrons in Davis=20 milled outdoors, enjoying the unseasonably warm weather.=20 Yet the blackout order was met with outright defiance by one municipal=20 utility. The city of Lodi refused to cut power to its residents Monday or= =20 Tuesday, saying it shouldn't have to suffer because of the financial crisis= =20 afflicting PG&E and Edison.=20 The outlook for today and the near future was brighter, as several big powe= r=20 plants came back on line after repairs. ISO officials also praised=20 Californians' conservation efforts, which had faltered in the morning but= =20 came on strong in the afternoon, helping to prevent further blackouts. By= =20 evening the grid was in a relatively mild Stage 2 power alert.=20 But the second day of blackouts -- plus an increasing threat of utility=20 bankruptcy -- pushed Davis to the brink. The governor cobbled together a=20 payment plan to rescue the qualifying facilities -- some 600 wind farms,=20 geothermal plants and other alternative-energy generators whose production= =20 has become increasingly vital in recent days.=20 Under Davis' plan, the Legislature and the PUC would order PG&E and Edison = to=20 pay the qualifying facilities for power delivered after April 1. The=20 utilities are required to buy power from the qualifying facilities under a= =20 1978 federal law designed to bring cheaper and cleaner forms of electricity= =20 to market.=20 Davis said the PUC would release a proposed order late Tuesday that would= =20 require the utilities to pay the qualifying facilities $79 a megawatt hour= =20 for five-year contracts or $69 for 10-year contracts. The Legislature also= =20 would have to pass a law authorizing the PUC to issue such an order.=20 But the situation was far from resolved late Tuesday, and PG&E and Edison= =20 were likely to oppose at least portions of Davis' plan.=20 Edison is willing only to make "some kind of partial payments going forward= ,"=20 said Thomas Higgins, a senior vice president with parent company Edison=20 International. "We have a limited amount of resources available to us in=20 rates, ... and that's the constraining factor."=20 PG&E, which has been making partial payments to the qualifying facilities,= =20 said it could pay them in advance, in full, for future power deliveries.=20 But PG&E said such payments would eat up half the $400 million it has=20 available each month to buy power -- and unless it gets a rate hike, there= =20 wouldn't be enough to pay the qualifying facilities and cover other expense= s,=20 including the cost of reimbursing the state Department of Water Resources f= or=20 the power the agency is buying on behalf of the troubled utility.=20 PG&E's proposal could represent a challenge of sorts to state officials:=20 Accept less money for the water department, or raise rates.=20 State officials "need to resolve who they want to see paid," PG&E spokesman= =20 John Nelson said. "There is a limited pool of money."=20 For his part, Davis insisted that the water department would be first in li= ne=20 to be paid, and he said the PUC will issue a proposed order to that effect.= =20 "We are getting paid before anybody else," Davis said.=20 Hundreds of qualifying facilities are out of commission because PG&E and=20 Edison haven't paid them. The situation has robbed the state of several=20 thousand badly needed megawatts and is a key reason blackouts have been=20 ordered. In normal times the facilities produce more than 20 percent of=20 California's electricity.=20 Some of the qualifying facilities have been threatening to haul one or both= =20 of California's beleaguered utilities into bankruptcy court unless they get= =20 paid soon, saying a bankruptcy filing might be the only way they can save= =20 their businesses.=20 "You've got to take care of the QF problem or the whole thing blacks out,"= =20 said Jerry Bloom, a lawyer representing one group of qualifying facilities.= =20 "(State officials) are starting to understand."=20 One thing that was fairly certain about Davis' still-sketchy payment plan: = It=20 wouldn't cover PG&E and Edison's existing debt to the qualifying facilities= ,=20 estimated at more than $1.48 billion.=20 In their current financial state, the utilities say they can't afford to pa= y=20 the existing debt. In addition, paying the debt would create a major=20 complication: Other creditors, including the big power generators, would=20 surely haul Edison and PG&E into bankruptcy court on the grounds that they= =20 weren't being treated fairly.=20 "You can't give preferential payment treatment to one class of creditors ov= er=20 another," PG&E's Nelson said. "You virtually assure that (the other=20 creditors) have to file an involuntary bankruptcy proceeding against you."= =20 But without full payment, it wasn't clear how many of the qualifying=20 facilities would be able to restart.=20 Executives at several plants -- the ones that run on natural gas -- said=20 they're not sure their gas suppliers will deliver unless the existing debts= =20 are cleared up.=20 "We need to convince a gas company to supply us," said Ed Tomeo of UAE Ener= gy=20 Operations Corp., which had to shut off its 40-megawatt Kern County plant= =20 Tuesday. "We're a company that already owes millions of dollars for gas=20 supplies. How do you coax them to sell you millions more?"=20 "It's wishful thinking ... that the gas suppliers are going to sell us gas,= "=20 Robert Swanson of Ridgewood Power said.=20 I>Bee Capitol Bureau Chief Amy Chance and staff writers Stuart Leavenworth,= =20 Bill Lindelof, Pamela Martineau and the Associated Press contributed to thi= s=20 report. ---------------------------------------------------------------------------= --- ---------------------------------------------------------------------------= --- -------------------------------------------------------------------------- Lodi still won't pull the plug By Carrie Peyton Bee Staff Writer=20 (Published March 21, 2001) In a growing rebellion against blackouts, the city of Lodi has twice refuse= d=20 to cut power to its residents despite an order from Pacific Gas and Electri= c=20 Co.=20 The small city-run electric system is among many disgruntled utilities,=20 including the Sacramento Municipal Utility District, that believe their=20 contractual pledges to cut back during emergencies were never meant for tim= es=20 like this.=20 "It's been a philosophical debate up to this point. Now I guess we've drawn= a=20 line in the sand," said Lodi utility director Alan Vallow.=20 PG&E said it is reviewing its interconnection contract, the agreement that= =20 links Lodi to the grid through PG&E-owned high-voltage lines, to determine= =20 what action it will take next.=20 "It's unfortunate that while the city of Lodi has received the benefit of= =20 this agreement for years, they are unwilling to bear the burden of this=20 statewide energy shortage," said PG&E's Jon Tremayne.=20 One utility coalition, the Northern California Power Agency, believes that= =20 PG&E has already violated that agreement by not lining up enough power for= =20 customers.=20 The agency wrote PG&E on Friday saying that its members -- municipal=20 utilities and irrigation districts -- believe they aren't required to=20 participate in blackouts prompted by financial disputes.=20 And SMUD, which has been considering dropping out of future blackouts, will= =20 be watching the response to Lodi, said SMUD board President Larry Carr.=20 Some SMUD directors say they're ready to go to court to force the issue. So= =20 is Lodi, population 58,000, said Vallow.=20 "I've heard an Edison executive describe this as a natural disaster akin to= =20 an earthquake. That's crap. This is a man-made event," he said.=20 Lodi said it will still help in genuine emergencies, such as fires or toppl= ed=20 transmission lines. But it decided that on Monday and Tuesday that wasn't t= he=20 case.=20 "You have 3,000 megawatts of QFs (qualifying facilities) offline because=20 their bills haven't been paid. Well, guess what? Somebody ought to pay thos= e=20 ... bills," Vallow said. ---------------------------------------------------------------------------= --- ---------------------------------------------------------------------------= --- ----------------------------------- Blackouts hit for second day; break seen Wednesday=20 By Audrey Cooper ASSOCIATED PRESS=20 March 20, 2001=20 SACRAMENTO =01) Rolling blackouts hit California for a second straight day= =20 Tuesday, closing souvenir shops in San Francisco's Chinatown, snarling=20 traffic and plunging schools and offices around the state into darkness.=20 Roughly a half-million homes and businesses from San Diego to the Oregon=20 border faced outages, blamed on the same factors that collided to force=20 blackouts Monday =01) unseasonably warm weather, reduced electricity import= s=20 from the Pacific Northwest, numerous power plants offline for repairs and= =20 less power provided by cash-strapped alternative-energy plants.=20 Five rounds of outages in San Diego affected about 74,000 customers. State= =20 power grid officials expected to have enough electricity to avoid further= =20 outages through at least Wednesday, although the supply remained tight.=20 State power regulators working on energy rescue=20 Federal regulators scored for not ordering more California refunds=20 ?=20 Gov. Gray Davis blamed the blackouts in part on the failure of Southern=20 California Edison and Pacific Gas and Electric Co. to pay millions of dolla= rs=20 they owe "qualifying facilities," power suppliers that use cogeneration =01= )=20 steam from manufacturing plus natural gas =01) or solar, wind and other=20 renewable energy to generate electricity.=20 State power grid officials say California this week has lost about half the= =20 electricity QFs normally provide. Several cogeneration plants say they=20 haven't been paid by Edison and PG&E for weeks and can't afford to buy=20 natural gas to fuel their plants.=20 Davis said the utilities are taking in money from customers but still faili= ng=20 to pay the QFs. The state has been spending about $45 million a day since= =20 January to buy power for customers of Edison and PG&E, which are so=20 credit-poor that suppliers refuse to sell to them.=20 "It's wrong and irresponsible of the utilities to pocket this money and not= =20 pay the generators," Davis said at a Capitol news conference Tuesday evenin= g.=20 "They've acted irresponsibly and immorally and it has to stop."=20 Southern California Edison officials said in a written statement that the= =20 utility is intent on paying creditors and working with the PUC to pay QFs f= or=20 future power sales. PG&E representatives were out of the office late Tuesda= y=20 night and didn't immediately return calls from The Associated Press seeking= =20 comment.=20 John Harrison of the Northwest Power Planning Council, a consortium that=20 monitors power use in several Western states, said blackouts on the first d= ay=20 of spring are an ominous sign of what lies ahead this summer.=20 "We're in trouble," he said. "We will likely be able to meet our needs this= =20 summer, but there won't be much to send to California."=20 Tuesday's outages began at 9:30 a.m. PST and continued in 90-minute waves= =20 until about 2 p.m., when the Independent System Operator lifted its blackou= t=20 order.=20 Grid officials credited an influx of power from the Glen Canyon hydroelectr= ic=20 plant on the Utah-Arizona border.=20 The blackouts were blamed for at least one serious traffic accident.=20 Two cars collided at an intersection without traffic lights in the Los=20 Angeles suburb of South El Monte, leaving two people with serious injuries,= =20 California Highway Patrol Officer Nick Vite said.=20 Ventura Foods in Industry sent its employees out for an early lunch after= =20 blackouts shut down its phones and computers.=20 "This is mild weather for this time of year. I don't know what's going to= =20 happen in the summer," manager Frank Hynes said. "This is going to have a= =20 serious impact on the state's economy. They can't just keep shutting people= =20 down."=20 Statewide, demand was higher than expected because of warm spring weather.= =20 Temperatures reached record highs across California on Monday, including th= e=20 80s and low 90s in Southern California. They were expected to be somewhat= =20 lower Tuesday but still in the 70s and 80s.=20 The ISO hoped demand would start to subside and conservation would kick in,= =20 but that did not happen Tuesday morning.=20 "We have not seen the kind of conservation we saw back in January," when th= e=20 first blackouts hit, ISO spokesman Patrick Dorinson said. "If we don't have= =20 conservation efforts, that just means that's more power we have to take off= =20 the grid."=20 In San Francisco's Chinatown, souvenir shops normally bustling with visitor= s=20 were forced to shut down. Nearby, irritated customers waited for a bank to= =20 reopen.=20 "It's no good for anybody =01) stores or businesses or people," said Yin Su= n=20 Chan, among those in line.=20 PG&E, the state's largest utility, accounted for most of the customers=20 affected.=20 At least 438,000 PG&E residential and business customers were affected as o= f=20 early afternoon, spokesman Ron Low said.=20 Edison cut power to about 50,000 customers. Edison was ordered to cut less= =20 power than PG&E and saved some due to conservation programs, including one= =20 that lets the utility shut off air conditioning for 118,500 residential and= =20 business customers when the power supply is tight.=20 About 73,400 San Diego Gas & Electric customers were hit by the blackouts.= =20 Los Angeles, whose municipal utility is not on the grid that serves most of= =20 California, wasn't included in the blackout order.=20 More than 1 million homes and businesses statewide experienced outages=20 Monday.=20 California's power crisis is expected to get even worse this summer, when= =20 temperatures soar and residents crank their air conditioning.=20 Natural gas supplies are tight, water supplies are down and the state is=20 spending tens of millions of dollars each day to buy electricity for Edison= =20 and PG&E, who say they are nearly bankrupt due to high wholesale power cost= s.=20 Edison and PG&E say they have lost more than $13 billion since last June to= =20 climbing wholesale electricity prices the state's 1996 deregulation law=20 prevents them from recouping from ratepayers.=20 Adding to the problems, the state this week lost about 3,100 megawatts from= =20 QFs. One megawatt is enough power to serve about 750 households.=20 The plants say they are owed about $1 billion for past sales to PG&E and=20 Edison.=20 PG&E said it is offering to prepay the QFs starting next month to get them= =20 back in operation. Negotiations were expected to continue Wednesday.=20 California Co-Generation Council attorney Jerry Bloom said he supports=20 proposals that will get the Qfs paid, but the promise of future payments ma= y=20 not be enough.=20 PG&E and Bloom said the utility's prepayments hinge on an upcoming Public= =20 Utilities Commission decision on whether the utility's rates are sufficient= =20 to pay its bills and cover the state's power purchases on its behalf, which= =20 amount to $4.2 billion since early January.=20 Davis said the PUC planned to issue a draft order late Tuesday directing th= e=20 utilities to pay their future QF bills.=20 It plans to take action on that order next Tuesday, Davis said. The=20 Legislature plans to approve a bill in the meantime giving the PUC the=20 authority to issue such an order and fine the utilities if they fail to=20 comply, he said.=20 Davis said he is confident the utilities and the state can pay their bills= =20 without further rate increases for Edison and PG&E customers.=20 ---------------------------------------------------------------------------= --- ---------------------------------------------------------------------------= --- ----------------------------------- State power regulators working on energy rescue=20 By Karen Gaudette ASSOCIATED PRESS=20 March 20, 2001=20 SAN FRANCISCO =01) State power regulators continue to delay the release of= =20 guidelines that will determine a portion of the money the Department of Wat= er=20 Resources can recoup from financially troubled utilities for electricity it= =20 has bought on their customers' behalf.=20 These guidelines will help the water department determine whether it must= =20 raise consumer power rates to reimburse the state for the more than $3=20 billion it has committed to buying electricity.=20 Assemblyman Fred Keeley, D-Boulder Creek, said Tuesday that the Public=20 Utilities Commission would likely have to raise rates by 15 percent to cove= r=20 the state's costs and the utilities' bills.=20 The PUC guidelines were most recently delayed by a letter from DWR Director= =20 Thomas Hannigan asking that the water department receive a percentage of=20 ratepayer money collected by the utilities equal to the percentage of=20 electricity it provides to utilities.=20 The DWR currently buys around 40 percent of the power used by Pacific Gas a= nd=20 Electric Co., Southern California Edison Co. and San Diego Gas and Electric= .=20 Under the DWR's proposal the utilities would have to hand over 40 percent o= f=20 the money they continue to collect from ratepayers.=20 The DWR would then also receive whatever money remains after the utilities= =20 subtract their own generation and long-term contract costs, the letter said= .=20 That amount would become the "California Procurement Adjustment" =01) an am= ount=20 that will help the state retrieve money spent on power purchases and help= =20 establish the size of state revenue bonds that are currently estimated to= =20 total $10 billion.=20 The state plans to issue the bonds in May to help pay off the more than $3= =20 billion Gov. Gray Davis' administration has committed to power purchases=20 since January to help the utilities climb out of debt.=20 Ron Low, a spokesman with PG&E, said the utility objects to paying the DWR= =20 such a large sum, claiming it would interfere with efforts to pay its=20 "qualifying facilities" =01) power plants that use the sun, wind, biomass o= r=20 natural gas to generate about one third of the state's electricity.=20 The nearly bankrupt utilities owe the QFs more than $1 billion for=20 electricity they have produced since November, said Jan Smutney-Jones,=20 executive director of the Independent Energy Producers.=20 Hannigan also said in the letter the DWR intends to use its authority to=20 raise consumer electricity rates to recoup any money not reimbursed through= =20 the CPA and other means.=20 The Public Utilities Commission expected to release the guidelines last wee= k,=20 but was delayed by debates over legislation that would slash the rates of= =20 environmentally friendly power plants under contract to provide electricity= =20 to the investor-owned utilities.=20 Without knowing how much ratepayer money the utilities need to pay these=20 "qualifying facilities" for future electricity, it's unknown how much money= =20 they'll have on hand to pay the DWR.=20 In a written statement, PUC Administrative Law Judge Joseph DeUlloa said th= at=20 he would issue a temporary decision on the CPA "as soon as is practical."= =20 Pacific Gas and Electric Co. and Southern California Edison Co. say they ha= ve=20 lost more than $13 billion since last June to climbing wholesale electricit= y=20 prices that the state's 1996 deregulation law prevents them from recouping= =20 from ratepayers.=20 ---------------------------------------------------------------------------= --- ---------------------------------------------------------------------------= --- ----------------------------------- Federal regulators scored for not ordering more California refunds=20 By H. Josef Hebert ASSOCIATED PRESS=20 March 20, 2001=20 WASHINGTON =01) House Democrats asked federal energy regulators Tuesday why= they=20 are not going more aggressively after alleged overcharges for wholesale=20 electricity in California and ordering more refunds.=20 The Federal Energy Regulatory Commission has asked suppliers to justify $12= 4=20 million in sales during the first two months of the year or refund the mone= y,=20 but critics charge that thousands of additional questionable sales are not= =20 being challenged.=20 The three commissioners testifying at a hearing of the House Commerce=20 subcommittee on energy, were asked why they limited their refund demands to= =20 only power sales that occurred during so-called Stage 3 alerts of acute pow= er=20 shortages in California.=20 "It appears to me a price is unreasonable when it is unreasonable," and not= =20 just during a power alert, said Rep. Rick Boucher of Virginia, the panels'= =20 ranking Democrat.=20 The commission last week ordered six power generators to justify some 1,000= =20 transactions during February in the California market whenever the price wa= s=20 above $430 per megawatt hour and occurred during a Stage 3 emergency alert.= =20 But the lawmakers were told Tuesday that 56 percent of another 14,168=20 transactions, occurring outside a Stage 3 emergency, also exceeded the $430= =20 trigger, but are not being questioned.=20 "The line was drawn to limit the scope of the refund," said agency=20 commissioner William Massey, a Democrat, who strongly opposed the refund=20 actions because he said they were too limited.=20 Chairman Curtis Hebert, a Republican, defended the way the commission decid= e=20 on what transactions to challenge saying that it sought to replicate market= =20 conditions as they existed at the time of the sales.=20 "We deserve a better explanation," retorted Boucher.=20 Massey said that agency's investigation of overcharges for January also=20 failed to consider thousands of transactions that exceeded the refund trigg= er=20 because they did not occur during Stage 3 supply emergencies.=20 Managers of California's electricity grid, state regulators and utilities= =20 have accused the agency of refusing to aggressively investigate price gougi= ng=20 by wholesalers who have charged from $150 to $565 per megawatt hour, as muc= h=20 as 20 times what prices were in 1999.=20 While Hebert and commissioner Linda Breathitt defended the commissioners=20 attempt to investigate whole electricity prices, Massey has been highly=20 critical.=20 What message does the agency's scrutiny of prices send to the power=20 companies? he was asked.=20 "It makes clear FERC is going to be looking for the wallet under the lamp= =20 post with the lights shining =01) and nowhere else," replied Massey.=20 Meanwhile, Massey and his two fellow commissioners, also disagreed sharply = on=20 whether the energy agency should impose temporary price controls on the=20 wholesale power market in the West to dampen further expected price increas= es=20 this summer.=20 Massey said he fears "a disasters in the making" if some price restraints a= re=20 not imposed by FERC, which regulates wholesale electricity sales. "We need = a=20 temporary time out," he said.=20 But Massey is in the minority on the commission. Both Hebert and Breathitt= =20 are against price caps, arguing they will have long-term detrimental impact= =20 on power supply.=20 The Bush administration has made its opposition to interfering in the=20 wholesale markets well known for weeks. Vice President Dick Cheney's task= =20 force is to unveil an energy plan in about a month that is expected to lean= =20 heavily on energy production.=20 ---------------------------------------------------------------------------= --- ---------------------------------------------------------------------------= --- ----------------------------------- Second Day of Blackouts Disrupts 500,000 Homes and Businesses=20 Power: Grid operators say the shortage should ease in the next few days, bu= t=20 officials see a grim summer.=20 By MITCHELL LANDSBERG and ERIC BAILEY, Times Staff Writers=20 A traffic signal that stopped working during Tuesday's rolling blackouts le= d=20 to this collision be tween a car and a truck at an intersection in El Monte= .=20 The outages ran from 9:30 a.m. to 2 p.m. AP ?????Electricity blackouts rolled through California for a second straight= =20 day Tuesday, disrupting business in one of the world's most technologically= =20 advanced economies and leaving schoolchildren groping in the dark. ?????Jinxed by a combination of bad luck and bad decisions, utilities were= =20 forced to cut off power to more than half a million homes and businesses fr= om=20 San Diego to the Oregon border. ?????By day's end, there was some good news from the operators of the=20 statewide power grid, who said the situation had eased and appeared likely = to=20 improve for the next few days. And Gov. Gray Davis announced a proposed=20 solution to one vexing problem: the utilities' failure to pay the state's= =20 small, alternative power generators, many of whom have stopped producing=20 power as a result. ?????Davis called the utilities "shameful" for failing to pay, and praised= =20 the alternative power generators, which include solar, wind and geothermal= =20 energy producers, as "good corporate citizens" who produced power although= =20 they weren't being paid. ?????"We are anxious to pay the [small producers], who are dropping like=20 flies," Davis said. ?????Despite the progress, it was hard for some people to look on the brigh= t=20 side after enduring outages that took place when the state's hunger for pow= er=20 was almost 50% less than at its summer peak. ?????"This is a taste, almost like an appetizer, of a really unpalatable me= al=20 that's going to be served up this summer," said Michael Shames of the Utili= ty=20 Consumers' Action Network in San Diego, himself a victim of a rolling=20 blackout that hit his office in San Diego early Tuesday. ?????Power officials have warned that this could be a grim summer in=20 California, since demand for electricity sharply rises when people turn on= =20 air conditioners. The state has been struggling to meet its power needs in= =20 recent months because of rising prices and a flawed deregulation plan that= =20 has left the two biggest private utilities on the brink of bankruptcy. Stat= e=20 leaders have so far failed to agree on a comprehensive plan to solve the=20 problems. Wally Quirk teaches a business class in a borrowed classroom Tuesday at=20 Sonoma State after the state's rolling blackouts cut the power to his usual= =20 classroom, which does not have any windows. SCOTT MANCHESTER / The Press Democrat ?????The latest round of blackouts began about 9:30 a.m. Tuesday when the= =20 California Independent System Operator, which runs the statewide grid,=20 determined that the demand for electricity was 500 megawatts more than the= =20 supply--an imbalance that meant the state was short on the power needed to= =20 supply electricity to about 375,000 homes. ?????Grid operators blamed a confluence of events, including warmer weather= ;=20 outages at several major power plants, including one unit of the San Onofre= =20 nuclear power station; a reduction in imports from the Pacific Northwest, a= nd=20 the shutdown of many alternative energy producers. Similar blackouts Monday= =20 were the first since January. ?????The situation improved somewhat by late Tuesday morning, with some=20 supplies restored and Californians conserving energy, and Cal-ISO was able = to=20 halt the rolling blackouts at 2 p.m. ?????Once again, customers of the Los Angeles Department of Water and Power= =20 were spared, although the municipally owned utility said its electrical=20 surplus was smaller than usual. The DWP, like Southern California Edison, w= as=20 affected by an outage at the huge Mohave power plant in Nevada, as well as = by=20 planned outages at several of its facilities. ?????As in the past, by far the biggest impact was felt by customers served= =20 by Pacific Gas & Electric, the state's largest utility, which cut power to= =20 438,000 homes and businesses. ?????Edison cut power to 47,462 customers in about 40 cities, but eventuall= y=20 was able to avoid blackouts by shutting off the air conditioners of some of= =20 the 118,500 customers who participate in a voluntary cutoff program. ?????San Diego Gas & Electric cut power to 73,400 customers. ?????Innovative Ways of Coping ?????As on Monday, most people took the outages in stride, as an annoying b= ut=20 ultimately unavoidable inconvenience. ?????In Palmdale, four schools lost power during one of the hourlong=20 blackouts, but teachers and students pressed on in the sunlight pouring=20 through windows and skylights. At Barrel Springs Elementary, Principal Cruz= =20 Earls said the biggest problem came when students had to go to the bathroom= :=20 Hand in hand, they made their way through darkened hallways with flashlight= s. ?????All in all, it wasn't a terrible experience. Then again, the weather= =20 wasn't that hot Tuesday, with a high of 79 in Palmdale, so the shutdown of= =20 air conditioners wasn't much of a hardship. "I don't want to think about th= e=20 conditions this could create in May or June," Earls said. ?????Businesses of all kinds complained about the lack of warning for the= =20 outages--and sometimes found innovative ways to get around the problem. ?????Rattled by news reports of Monday's rolling blackouts, El Burrito=20 Mexican Food Products in the city of Industry started its Tuesday shift at = 2=20 a.m. to beat the clock in the event of an outage. That hunch paid off.=20 Workers had just finished cooking and packaging the last batches of salsa a= nd=20 masa when the lights went out at 10:20 a.m. ?????Company owner Mark Roth said the firm will continue working odd hours = to=20 avoid further outages. But he isn't buying the line from the utilities that= =20 they can't provide advance warning because of concerns about looting and=20 rioting. ?????"We're ready to do whatever it takes to get through this thing," he=20 said. "But they've got to give us some notification." ?????At Big O Tires in Elk Grove, just south of Sacramento, owner Daniel Cr= um=20 had his 14 workers take an early lunch break or head to the warehouse to=20 reorganize the goods. Without electricity, they couldn't repair brakes or= =20 align front ends. ?????"I'd never let them be idle," said Crum. ?????At least two minor traffic accidents were blamed on the outages. ?????The blackouts resulted from a convergence of factors. ?????Demand was slightly higher than expected, probably because of=20 unseasonably warm weather. Supplies were tighter than usual, in part becaus= e=20 of several outages, including that at the Mohave plant, half of which was= =20 brought back on line by the end of the day. ?????The San Onofre Nuclear Generating Station was still limping along=20 without power from one of its two 1,100-megawatt units, which was shut down= =20 Feb. 3 after a half-hour fire in a nonnuclear part of the plant. Edison,=20 which operates San Onofre, initially estimated the unit would be out for=20 several weeks but recently said "extensive damage" to parts of the turbine= =20 will keep the unit out of commission until mid-June. ?????Shipments from the drought-stricken Pacific Northwest, which generates= =20 most of its electricity from large dams, were also down. ?????"Each time we take a measurement, we're closer to the all-time record= =20 for the driest year," said Dulcy Mahar, spokeswoman for the Bonneville Powe= r=20 Administration, the network of federal dams that provides the region with= =20 much of its electricity. "We've been doing what we can, but we simply don't= =20 have power to sell." ?????Finally, there was the problem of the small and alternative energy=20 producers, which have shut down plants because they haven't been paid by th= e=20 private utilities since November. Those outages have cost the state about= =20 3,000 megawatts of electricity, enough for about 2.3 million homes. ?????"You're seeing the system freeze up," said David Sokol, chairman and C= EO=20 of MidAmerican Energy Holdings Co., which runs eight geothermal plants in t= he=20 Imperial Valley through its subsidiary, CalEnergy. His company hasn't shut= =20 down yet, but Sokol said smaller companies couldn't continue to sell their= =20 energy to utilities for free. ?????"Why should we fund Edison?" he asked. "That's just ridiculous." ?????A Choice of 2 Rate Plans ?????Davis joined lawmakers in the Capitol on Tuesday to outline his plan t= o=20 get the producers running again. He said utilities have had no right to=20 collect money from ratepayers and then not use the funds to repay the small= =20 producers. The state has spent billions to buy power from large conventiona= l=20 producers on behalf of the utilities but has refused to pick up the tab for= =20 alternative energy. ?????"The utilities acted in a shameful manner by putting money in their=20 pockets that was designed to pay the [small producers]," Davis said. ?????The plan outlined by Davis would allow the generators to choose betwee= n=20 two rate plans. They could decide to be paid 7.9 cents per kilowatt-hour ov= er=20 five years or 6.9 cents a kilowatt-hour over 10 years. ?????The utilities must begin paying the generators the new rates beginning= =20 April 1 or face fines, Davis said. ?????The question of how the companies will get paid the about $1.5 billion= =20 they are owed remains unresolved. That issue will be decided in coming week= s=20 as Davis' negotiators continue to work on rescue plans for the state's=20 financially hobbled private utilities. ?????PG&E spokesman Ron Low said the state's largest utility did not take= =20 kindly to Davis' criticism, and noted that the governor's plan is similar t= o=20 a proposal that PG&E made last week to producers. ?????Jan Smutny-Jones, executive director of a trade group that includes so= me=20 of the small generators, described the plan as a positive step. ?????"The governor got it right in that it's not acceptable for small power= =20 producers to continue to generate and not be paid," Smutny-Jones said. "But= =20 we'll need to see what the order says; the devil will truly be in the=20 details." ?????Grid operators said the state's overall energy situation eased by midd= ay=20 Tuesday because of repairs at the Mohave plant and another large plant at= =20 Ormond Beach, and because the Western Area Power Administration came up wit= h=20 300 megawatts of electricity from Glen Canyon Dam. ?????Also, grid spokesman Patrick Dorinson said conservation savings spiked= =20 upward after earlier complaints that Californians weren't conserving. ?????"We saw the people of California probably conserve 900 megawatts today= ,"=20 he said. "That was probably the difference." ---=20 ?????Times staff writers Andrew Blankstein, Jose Cardenas, Marla Dickerson,= =20 Noaki Schwartz, Nicholas Riccardi, Doug Smith, Rebecca Trounson and Richard= =20 Winton in Los Angeles, Miguel Bustillo and Julie Tamaki in Sacramento, Mari= a=20 La Ganga in San Francisco, Stanley Allison, Matt Ebnet, Scott Martelle,=20 Dennis McLellan, Monte Morin, Jason Song, Mai Tran and Nancy Wride in Orang= e=20 County, and Richard Simon in Washington contributed to this story. ---------------------------------------------------------------------------= --- ---------------------------------------------------------------------------= --- ----------------------------------- Fragile Supply Network Apt to Fail=20 By JENIFER WARREN and ERIC BAILEY, Times Staff Writers=20 ?????A lot of people were caught off guard by the blackouts that swept over= =20 California this week. Debra Bowen wasn't one of them. ?????As chairwoman of the state Senate Energy Committee, she is=20 intimately--and painfully--familiar with the state's energy supply. And she= =20 is willing to share a secret: It's a fragile system, capable of collapse at= =20 any time. ?????That knowledge keeps Bowen awake at night, particularly with the=20 approach of summer, when power demand surges as Californians get reacquaint= ed=20 with their air conditioners. ?????"I sound a bit less like Chicken Little today, don't I?" Bowen said=20 Tuesday, as chunks of the state once again were forcibly darkened. "I know = a=20 lot of people don't feel we have a problem. But we have a very, very big=20 problem." ?????With the recent slowdown in Stage 3 emergencies, a sense of calm had= =20 settled over the energy debate, and even some legislators were speaking wit= h=20 guarded optimism about the hot months ahead. ?????On Tuesday, however, a creeping sense of doom was almost palpable amon= g=20 energy watchers, and previous supply forecasts--which predict that the stat= e=20 may yet escape summer blackouts--were being given a second look. ?????"The outages of the last two days are something that Californians are= =20 going to have to get used to for July and August," said Michael Zenker,=20 California director of Cambridge Energy Research Associates. The=20 Massachusetts consulting firm is predicting about 20 hours of blackouts thi= s=20 summer. ?????At the California Independent System Operator, which manages 75% of th= e=20 statewide power grid, officials said the energy cushion the state had in=20 recent weeks was, in some ways, a phantom caused by heavy imports of power. ?????Cal-ISO spokesman Patrick Dorinson said people may have been deluded= =20 into a false state of comfort: "Maybe there is a tendency to think things= =20 have improved," he said. In fact, they haven't. ?????More than anything, this week's events illustrate the delicate balance= =20 of factors that keep California illuminated, from the multitude of supply= =20 sources to the weather. ?????Temperatures were higher than usual. Alternative-energy suppliers--who= =20 haven't been paid in months by the cash-strapped utilities--cut their outpu= t.=20 Suppliers in the Northwest--which faces a drought--slashed exports. Equipme= nt=20 breakdowns and maintenance at power plants--much of it unanticipated--took= =20 13,000 megawatts offline. A utility-run program that gives businesses=20 discounts in exchange for cutting power during emergencies is all but dead. ?????"The fragility of the system is such that a small perturbation can tur= n=20 everything upside down very easily," said Gary Ackerman, executive director= =20 of the Western Power Trading Forum, a group of electricity generators and= =20 traders. ?????One factor receiving particular attention is the dip in supply caused = by=20 unscheduled maintenance. To help officials predict available supply,=20 generators provide an annual maintenance plan that is updated regularly. ?????In addition, however, facilities sometimes shut down for unexpected=20 reasons: leaking tubes, burnt-out transformers, cracked turbines and faulty= =20 feed pumps. At one point Tuesday, about 8,200 megawatts were unavailable=20 because of unscheduled shutdowns. That's enough to supply about 6 million= =20 households, and up from 5,700 megawatts a week ago. ?????The huge 1,400-megawatt Mohave power plant near Laughlin, Nev., which= =20 supplies Southern California Edison and the Los Angeles Department of Water= =20 and Power, was felled Monday by a transformer problem. That was enough to= =20 push the state into blackouts. ?????A growing number of skeptics, however, question whether those reasons= =20 are always valid, accusing generators of withholding power to shrink supply= =20 and drive up prices. ?????"There's no way to verify it, so you've got to take their word for it,= "=20 said Frank Wolak, a Stanford University economist who studies California's= =20 electricity market. "And given that it's very profitable for these things t= o=20 occur, you start to wonder if they're creating an artificial scarcity." ?????Tom Williams of Duke Energy said the Houston-based company is working= =20 hard to keep its California power plants, which are capable of producing=20 3,351 megawatts of electricity, in operation after months of near-continuou= s=20 operation. ?????"It's like riding a moped across the country," he said. "They're just= =20 not meant to run this hard." ?????Last week, the state Senate formed a committee to investigate charges = of=20 market manipulation by power suppliers. The chairman, state Sen. Joe Dunn= =20 (D-Santa Ana), says the issue of unscheduled plant shutdowns is on his agen= da. ?????"The problem is: How does one prove that a particular outage was part = of=20 a deliberate strategy to deprive the state of kilowatts, rather than a resu= lt=20 of normal business operations?" Dunn said. ---=20 ?????Times staff writer Nancy Rivera Brooks contributed to this story. ---------------------------------------------------------------------------= --- ---------------------------------------------------------------------------= --- ----------------------------------- Elevator Anxiety Is Riding High=20 Emergencies: Workers in skyscrapers worry about blackouts trapping them in= =20 their buildings. Some take the risk in stride; others make plans to take th= e=20 stairs.=20 By JOHN M. GLIONNA and JOE MOZINGO, Times Staff Writers=20 ?????SAN FRANCISCO--In Susan Clifton's highly placed opinion, sunny Tuesday= =20 would have been a picture-perfect day to work atop one of the tallest=20 buildings in San Francisco, a scenic city littered with soaring skyscrapers= . ?????But Clifton--like many other high-rise office dwellers in blackout-pro= ne=20 parts of California--couldn't help but feel some high anxiety at the prospe= ct=20 of being stranded by electrical outages that were sweeping across the state= =20 for a second day. ?????"I think about it all the time," said Clifton, a 21-year-old=20 receptionist at Deutsche Bank's offices on the 48th floor of a tower in the= =20 city's financial district who recently moved from rural Virginia. "The way = I=20 see it, Californians take a lot of things on faith, working atop tall=20 buildings with all these earthquakes and power outages." ?????For Long Beach office worker Dave Suhada, the anxiety has taken the fo= rm=20 of elevator phobia: a fear of getting stuck on an 80-degree day crammed in = a=20 pod of sweating, heavy-breathing humans, with no way out. ?????"I'm just eyeing the buttons to see which one I could push as fast as = I=20 can if the power goes out," he said.=20 ?????For 20-year-old Lisa Riley, it means entering the elevator each day in= =20 her Long Beach office building with a prayer. "I just could not get stuck f= or=20 an hour and a half," she said, nodding nervously. Often she now opts for th= e=20 stairs. ?????In San Francisco, emergency services officials say that most of the=20 city's office buildings are equipped with backup generators to run elevator= s=20 and security equipment in the event of a blackout. ?????Fire Department spokesman Pete House said the city has 19 trucks with= =20 experts trained to extricate people trapped in elevators. Firefighters=20 handling blackout-related emergencies rescued a person trapped in a downtow= n=20 building Tuesday and handled five elevator mishaps Monday. ?????Christopher Stafford didn't get caught inside an elevator Monday, but= =20 suffered the next-worst thing: being stranded in his 15th-floor apartment= =20 after the power failed when he went home for lunch. ?????So the 41-year-old real estate worker trooped down the stairs to the= =20 lobby and even made some new friends along the way, helping a few elderly= =20 women who were struggling down the stairs. ?????"It was a pain," he acknowledged. "But I have to tell you: I really li= ke=20 my panoramic view, so it's worth the hassle." ?????Nowadays, Sherrie Tellier makes sure her cellular phone is in hand whe= n=20 she gets in the elevator. She got trapped once before, and the emergency=20 phone didn't work. It's amazing, she said, how small an elevator seems when= =20 you can't get out. "It's like a broom closet.Now there's a sigh of relief= =20 every time the door opens." ?????Some high-rise office workers said Tuesday that they preferred not to= =20 think about the perils of going without power and being vulnerable and=20 isolated so high up. ?????But on the 42nd floor of San Francisco's Transamerica Tower, Sasha=20 Monpere wasn't fazed by the chance that during a blackout, her building's= =20 backup generators wouldn't kick in. ?????"Hey, I'm young and I'm healthy. I can always walk down the stairs,"= =20 said the 29-year-old receptionist. "I've done the Statue of Liberty. It can= 't=20 be any worse than that. And walking down 42 flights is a lot easier than=20 walking up all those stairs." ?????Likewise with Phil Ip, who works on the 52nd--and top--floor of San=20 Francisco's tallest skyscraper. The 25-year restaurant veteran says he has= =20 the utmost faith in modern technology. ?????"We're safe, even up here," said Ip, assistant general manager of the= =20 Carnelian Room, a restaurant atop the Bank of America building. "You should= =20 see the engineer's room in this building. It's like a big steamship. They'r= e=20 equipped for anything that could happen." ?????One floor below, Cheryl Martin hears every day about people's fear of= =20 heights. In the year since she began answering phones in a law office, she= =20 has often escorted clients afraid of express elevators that shudder and ris= e=20 so fast that passengers' ears pop from the altitude gain. ?????"Everybody, and I mean everybody, asks, 'So, what happens during a pow= er=20 outage?' " she said. ?????Rory Thompson said he believes in karma and is sure that if the rollin= g=20 blackouts come calling, his office will be spared. In July 1993, Thompson's= =20 building was the site of an incident known as the 101 California St.=20 massacre, in which gunman Gian Luigi Ferri killed eight people and wounded= =20 six before killing himself. ?????"This building has already had its bad day," he said. "They say that t= he=20 day after a crash is the safest day to ride an airline. So I'll take my=20 chances with the rolling blackouts." ---------------------------------------------------------------------------= --- -------------------------------------------------------------------------- State Says It's Accelerating Plan to Buy Power Utilities' Grid=20 Government: Talks with Edison are reported near completion, but agreement= =20 with heavily indebted PG&E has a way to go.=20 By RONE TEMPEST and DAN MORAIN, Times Staff Writers=20 ?????SACRAMENTO--As blackouts hit California for a second day Tuesday, a ke= y=20 consultant to Gov. Gray Davis said negotiations to buy the power grid owned= =20 by the state's largest utilities "are proceeding at an accelerated pace." ?????Wall Street consultant Joseph Fichera said talks with Southern=20 California Edison could be wrapped up within days, although those with PG&E= =20 are much less advanced.=20 ?????The administration and PG&E have not reached even an agreement in=20 principle, he said. PG&E, which has more debt than Edison, says its=20 transmission lines are more extensive than those of its Southern California= =20 counterpart. ?????The state wants to buy the utilities' transmission lines and other=20 assets for about $7 billion to provide cash to the utilities, help stabiliz= e=20 the electricity supply and ease the power crunch that has plagued Californi= a=20 for months. To research the grid purchase, Fichera said, the state has had = to=20 pore over 80,000 documents just to assess the utilities' liabilities. ?????"We are working at a good pace," said Fichera, chief executive of the= =20 New York firm Saber Partners. " . . . If we get to a deal-breaker, it might= =20 be longer." ?????By making Fichera, who is also a consultant to the Texas Public=20 Utilities Commission, available to reporters Tuesday, the Davis=20 administration was clearly trying to reassure the public that progress is= =20 being made on the governor's plan to pull the state out of the crisis. ?????Since mid-January, when the big utilities' credit failed and suppliers= =20 stopped selling to them, the state has spent nearly $3 billion buying=20 electricity from a handful of large suppliers in Texas, Oklahoma, Georgia a= nd=20 North Carolina. Not a cent has gone to the hundreds of alternative energy= =20 suppliers in California who provide about a quarter of the state's=20 electricity. ?????The Monday and Tuesday blackouts occurred partly because many of the= =20 cash-strapped alternative suppliers, including solar, biomass and wind powe= r=20 units, cut their normal supply to the system in half. They say Edison and= =20 PG&E have not paid them since November; the utilities say they are out of= =20 cash. ?????Assemblyman Fred Keeley (D-Boulder Creek) said the plight of the=20 alternative suppliers has dragged on because of the complexity of dealing= =20 with "almost 700 individual contractors." ?????Another delaying factor, said Keeley, who with state Sen. Jim Battin= =20 (R-La Quinta) worked for almost three months to come up with a legislative= =20 plan to lower the small producers' prices, was "the huge enmity . . .=20 manifested between the utilities and the qualifying facilities. These peopl= e=20 just don't like each other." ?????This week's blackouts provided two painful lessons for the Davis=20 administration: ?????* When it comes to electricity, size doesn't matter--every kilowatt=20 counts. During peak use, a small wind power facility in Riverside County ca= n=20 make the difference between full power and blackouts. ?????* There is no such thing as a partial solution. Unless the whole energ= y=20 equation is balanced, the parts don't work. ?????For the Davis plan to work, several key elements need to come together= =20 or utility customers will almost certainly face rate increases above the 19= %=20 already set in motion: ?????* The cost of power purchased by the state must be reduced through=20 long-term contracts with the big out-of-state producers. ?????These contracts, the details of which the Davis administration has kep= t=20 confidential, are still being negotiated by Davis consultant Vikram Budhraj= a=20 of the Pasadena firm Electric Power Group. The administration says it has= =20 concluded 40 contracts with generators, about half of which have been signe= d. ?????According to the most recent statistics released by the Department of= =20 Water Resources, which buys power for the state, current prices are still= =20 well above the rate state Treasurer Phil Angelides says is necessary for a= =20 planned $10-billion bond offering to succeed. ?????The bonds, set for sale in May, will be used to reimburse the state fo= r=20 the money it will have spent by that time to buy electricity. The state is= =20 currently spending at a rate of $58 million a day to buy power. If prices= =20 stay high, the $10 billion in bonds will not cover the state's power=20 purchases by the end of the summer. ?????Angelides says he cannot proceed with bridge financing for the bonds= =20 until the Public Utilities Commission devises a formula to guarantee that a= =20 portion of utility bills will be dedicated to bond repayment. Angelides has= =20 estimated that, under the January law that put the state in the power buyin= g=20 business, the state must be reimbursed $2.5 billion annually, and that $1.3= =20 billion is needed to service the debt. ?????PUC Administrative Law Judge Joseph R. DeUlloa is expected to announce= =20 his ruling on the reimbursement rate later this week, leading to a PUC vote= =20 on the matter as early as next week. ?????* The rates charged for electricity by the alternative producers, know= n=20 as qualifying facilities, must be cut at least in half, down from an averag= e=20 of more than 17 cents per kilowatt-hour. In his news conference Tuesday,=20 Davis said he will ask the PUC to set QF rates at 6.9 cents for 10-year=20 contracts and 7.5 cents for five-year contracts. ?????Meanwhile, PUC Chairman Loretta Lynch, a Davis appointee, said Tuesday= =20 that the commission will vote next week on a proposed order requiring=20 Southern California Edison and Pacific Gas & Electric to pay the QFs for=20 electricity in the future. Lynch said a recent PUC assessment showed that t= he=20 utilities have enough cash on hand for that. ?????"We are trying to make sure the folks providing the power get paid,"= =20 Lynch said. "The qualified facilities have demonstrated that they haven't= =20 been paid and that it is impairing their ability to provide power." ?????The utilities contend that if they pay the small providers what they o= we=20 them, there will not be enough money left to pay other creditors. ?????"There is not enough money in the current rate structure to pay the=20 [alternative producers], pay the [Department of Water Resources] and pay th= e=20 utilities for their generation," said John Nelson, a spokesman for PG&E. ?????* The utilities must sell to the state the power they produce=20 themselves, mainly from hydro and nuclear sources, at a rate only slightly= =20 above the cost of producing it. This is tied to the ongoing negotiations=20 between the Davis administration and the utilities to restore the=20 near-bankrupt utilities to solvency. ---=20 ?????Times staff writers Julie Tamaki, Miguel Bustillo and Tim Reiterman=20 contributed to this report. ---------------------------------------------------------------------------= --- -------------------------------------------------------------------------- L.A., Long Beach File Suits Over Gas Companies' Prices=20 Energy: Separate actions allege a conspiracy and gouging. Suppliers blame= =20 rising demand and a fluctuating market.=20 By TINA DAUNT and DAN WEIKEL, Times Staff Writers=20 ?????Seeking damages that could reach "into the billions of dollars," the= =20 cities of Los Angeles and Long Beach on Tuesday filed separate lawsuits=20 alleging that a coalition of gas companies illegally conspired to eliminate= =20 competition, drive up natural gas prices and discourage the construction of= =20 electricity generating plants in California. ?????Officials from the two cities alleged that Southern California Gas Co.= ,=20 San Diego Gas & Electric and El Paso Natural Gas Co. violated the state's= =20 antitrust law and engaged in unfair and fraudulent business practices that= =20 caused gas prices to skyrocket. ?????The cities are the first California municipalities to take action=20 against the gas companies. A number of similar lawsuits filed by antitrust= =20 attorneys, state regulators and private citizens are pending elsewhere. ?????The energy companies deny any impropriety. They contend that Californi= a=20 is the victim of its own soaring electricity demand and overreliance on=20 fluctuating spot markets for natural gas. ?????"The conspiracy theories that have been promoted have no basis in=20 reality," said Denise King, spokeswoman for Southern California Gas' parent= =20 company, Sempra Energy, which also was named in the suits. "Southern=20 California Gas continues to look out for the best interest of its customers= ." ?????The lawsuits filed in Los Angeles County Superior Court accuse the=20 companies of conspiring to manipulate the price of natural gas by agreeing = to=20 kill pipeline projects that would have brought ample supplies of cheaper=20 natural gas to Southern California. ?????They allege that executives for the energy companies made the pact=20 during a meeting in a Phoenix hotel room five years ago to discuss=20 "opportunities" arising from the state's newly deregulated electricity mark= et. ?????"The fulfillment of the illicit plan has had devastating effects on=20 Southern California gas consumers," according to Los Angeles' suit. "Gas=20 prices in the Southern California market have skyrocketed, and the Southern= =20 California gas consumers are paying the highest prices in the nation." ?????In recent months, natural gas prices have tripled across the nation fo= r=20 a number of reasons, including a shortage of supplies to meet demands for= =20 home heating. Prices have increased far more in California, where natural g= as=20 is a central factor in the state's energy crisis. The state relies on the= =20 clean-burning fuel to generate half its electrical power. ?????"This not only led to price-gouging of all natural gas consumers, from= =20 homeowners to government to industry, but it contributed to the current=20 electrical power crisis in California," said City Atty. James K. Hahn, a=20 mayoral candidate who urged the City Council to pursue the case. ?????Chris Garner, Long Beach's utility director, said that since November,= =20 the average residential bill for gas in Long Beach has more than doubled, t= o=20 $175 a month. Some customers, he said, have seen rate increases of 500%. ?????"The people of Long Beach are being gouged by energy conglomerates who= =20 are artificially manipulating the supply of natural gas and reaping excess= =20 profits at the expense of the public," said City Attorney Robert Shannon. ?????Holding a special meeting, the Los Angeles City Council voted 12 to 0= =20 Tuesday to file the suit. ?????"If the allegations are true, they are extremely serious," said=20 Councilman Mike Feuer, who is a candidate to succeed Hahn as city attorney.= =20 "And there appears to be some important evidence that substantiates the=20 allegations in the complaint, which means that this lawsuit is, I think, mo= re=20 than a viable lawsuit." ?????Councilman Mark Ridley-Thomas added: "We cannot tolerate this and we= =20 must use the full weight of the law to try to correct it." ?????A growing number of lawsuits around the state are targeting California= 's=20 natural gas suppliers. El Paso Corp., which owns the main pipeline=20 transporting out-of-state gas to Southern California, has been targeted=20 repeatedly by utility companies, state regulators and antitrust attorneys.= =20 ?????Some of the first antitrust lawsuits were filed against Sempra Energy = in=20 December. They were brought by Continental Forge Co., a Compton-based=20 aluminum forging business, and Andrew and Andrea Berg, who own a business i= n=20 San Diego. ?????The cities' lawsuits request that the defendant companies be barred fr= om=20 such conduct in the future, and they seek civil penalties and damages. ?????Shannon estimates that Long Beach could collect more than $100 million= =20 in damages, including triple penalties for antitrust violations. ?????"We are filing this for our citizens," Shannon said. "They include the= =20 poor, the elderly, people living on fixed incomes and small business owners= ." ?????The Los Angeles suit was filed on behalf of all Californians. Official= s=20 place damage estimates "in the billions."=20 ?????Hahn, however, warned council members that it could take the city a ye= ar=20 or more to resolve the suit. ?????"Lawsuits take time," Hahn said. "We are hopeful we can enter into=20 meaningful discovery to disclose what's been going on." ---------------------------------------------------------------------------= --- -------------------------------------------------------------------------- Davis OKs Subsidy of Pollution Fees=20 Smog: As part of secret deal to get long-term energy contracts, state would= =20 pay for some of the credits that allow excess power plant emissions. Critic= s=20 renew call for full disclosure.=20 By DAN MORAIN , Times Staff Writer=20 ?????SACRAMENTO--As part of his closed-door negotiations to buy electricity= ,=20 Gov. Gray Davis has agreed to relieve some generators from having to pay=20 potentially millions of dollars in fees for emitting pollutants into the ai= r,=20 Davis said Tuesday. ?????Davis announced two weeks ago that his negotiators had reached deals= =20 with 20 generators to supply $43 billion worth of power during the next 10= =20 years. ?????However, the Democratic governor has refused to release any of the=20 contracts or detail various terms, contending that release of such=20 information would hamper the state's ability to negotiate deals with other= =20 generators and therefore ultimately would raise prices Californians pay for= =20 electricity. ?????Sources familiar with the negotiations, speaking on condition of=20 anonymity, said the agreement reached with Dynegy Inc., a power company bas= ed=20 in Houston, is one that includes language requiring that the state pay the= =20 cost of credits that allow emissions. Dynegy spokesman Steve Stengel declin= ed=20 to discuss the company's deal with the state. ?????"We couldn't get them to sign contracts; it was a sticking point," Dav= is=20 said of the decision to pay the fees of some generators. "We had to lock do= wn=20 some power so we were not totally dependent on the spot market." ?????The fees in question are part of an emission trading system known as= =20 RECLAIM. Under the system, companies are allotted a certain amount of=20 allowable pollution. If their operations pollute more, companies are requir= ed=20 to purchase credits on an open market. Currently the credits cost about $45= =20 per pound of pollution--an amount that can lead to a bill of well over $10= =20 million a year for a power plant. ?????The South Coast Air Quality Management District, which regulates=20 pollution in the Los Angeles Basin, is considering steps to significantly= =20 lower the cost of the system--a step that could considerably cut the state'= s=20 potential cost, Davis said. ?????Senate Energy Committee Chairwoman Debra Bowen (D-Marina del Rey)=20 defended the decision to cover the power company's costs. ?????"It is a question of whether it brings down the price of power," she= =20 said. "If it brings down the price of power, I don't have a problem with it= ." ?????Nevertheless, word that the contracts could bind the state to pay=20 pollution fees caused some critics of Davis' policy to renew calls for Davi= s=20 to reconsider the secrecy surrounding the power negotiations. The payment= =20 provision underscores the fact that the contracts involve more than merely= =20 the prices the state will pay for its megawatts, the critics note. ?????"The Legislature should have known about it," said Senate President Pr= o=20 Tem John Burton (D-San Francisco). "It is going to cost taxpayers money. It= =20 makes you wonder. . . . This was a policy issue that was never discussed wi= th=20 the Legislature." ?????V. John White, a lobbyist for the Sierra Club, who also represents=20 alternative energy producers, called the contract proposal "a horrible=20 precedent." ?????"Until we know exactly what the state has agreed to and how much of a= =20 subsidy this represents, we can't determine how serious the breach of=20 principle this is," White said. ?????Another critic of the secrecy of the negotiations, Terry Francke,=20 general counsel for the California First Amendment Coalition, said the=20 provision in question "raises the possibility that there are other=20 [concessions]" that have not yet come to light. ?????In the summer, when demand for power is highest, some generators=20 probably will exceed pollution limits set by regional air quality managemen= t=20 districts. ?????To avert blackouts, state officials might ask the companies to keep=20 plants running. In such cases, some sources familiar with aspects of the=20 contracts said, the contract language could be interpreted to suggest that= =20 the state would cover any fines--although Davis said Tuesday the state will= =20 not cover the cost of fines. ?????A recent Dynegy filing with the Securities and Exchange Commission=20 underscores the rising cost of pollution-related measures. The company, whi= ch=20 is partners with NRG Energy in three California plants in El Segundo, Long= =20 Beach and Carlsbad in San Diego County, said its "aggregate expenditures fo= r=20 compliance with laws related to the regulation of discharge of materials in= to=20 the environment" rose to $14.3 million in 2000, from $3.6 million in 1999. ?????A South Coast Air Quality Management spokesman said Dynegy's facilitie= s=20 appear to be fairly clean--although Sierra Club lobbyist White said Dynegy= =20 has been seeking a permit at one of its plants to burn fuel oil, which is= =20 dirtier than natural gas. ?????Davis said he intends to "make this information public," but he added= =20 that "we do not want to put the public's interest in jeopardy by asking the= m=20 to pay higher prices." ?????"Nobody likes the notion that [the administration is] not being fully= =20 forthcoming," Davis said. "But I also have a corollary responsibility that = I=20 don't stick these generators with a higher rate." ---------------------------------------------------------------------------= --- -------------------------------------------------------------------------- As Losses Mount, Companies Work Around Outages=20 By MARLA DICKERSON,JERRY HIRSCH and NANCY CLEELAND, Times Staff Writers=20 ?????As blackouts moved from theory to reality, many Southern California=20 businesses spent Day 2 assessing their losses and digging in for what they= =20 expect to be a long, hot summer. ?????An hour without electricity may be an inconvenience for most residents= .=20 But for manufacturers and many other businesses, even a brief loss of power= =20 can generate tens of thousands in losses. ?????Whether shaping metal or making salsa, businesses of all kinds=20 complained Tuesday about the lack of warning of impending outages, even as= =20 they sought sometimes creative ways to work around the loss of power. ?????Rattled by news reports of Monday's rolling blackouts, Industry-based = El=20 Burrito Mexican Food Products started its Tuesday shift at 2 a.m. Workers h= ad=20 just finished cooking and packaging the last batches of salsa and masa when= =20 the lights went out at 10:20 a.m. ?????"We dodged a bullet," said El Burrito founder Mark Roth. "Losing a day= 's=20 production of salsa would have cost me $15,000 to $20,000." ?????But other companies weren't so fortunate. ?????Long Beach-based Delco Machine & Gear was still totaling up its losses= =20 from Monday's blackout, which amounted to at least $30,000 in lost wages an= d=20 production, said Nick Campanelli, vice president of manufacturing. The=20 company, a division of Florida-based B/E Aerospace Inc., makes parts for th= e=20 aerospace industry. The sudden loss of power caused its sophisticated metal= =20 cutting and grinding machines to crash, ruining precision parts in producti= on. ?????But the losses don't end there. He said employees will need to spend= =20 hours resetting the equipment. Campanelli is particularly irked that the=20 company received no warning. ?????"Five minutes' notice," he fumed. "That's all I needed." ?????Although businesses such as Campanelli's typically receive no warning= =20 that they are about to lose power, insurance companies count the rolling=20 blackouts as "planned events," a determination that in most cases=20 disqualifies a business from making a claim. ?????"I know it must be frustrating for businesses who have the power go of= f=20 suddenly, but these outages are planned by the grid operators," said Pete= =20 Moraga of the Insurance Information Network of California. "That means it= =20 would not be a covered peril in a traditional business insurance policy." ?????Typically, business insurance covers loss of profit and damage from=20 unforeseen events such as fires or windstorms. The component of the policy= =20 that covers interruptions in business kicks in after a given amount of time= =20 elapses, usually 24 to 48 hours. ?????Business polices can be written to include unusual coverages, Moraga= =20 said, but he has never heard of a policy that covers losses from a rolling= =20 blackout. ?????Some companies are taking measures not to get caught in a situation=20 where a blackout can hurt them. ?????The region's largest steel supplier shut down for two hours Monday aft= er=20 Southern California Edison called to warn of tight supplies. ?????"We just can't take a chance," said Lourenco Goncalvez, president of= =20 California Steel Industries Inc. in San Bernardino County. "We have a lot o= f=20 safety issues. People could get hurt." ?????Goncalvez said the plant has multiple 20-ton and 25-ton overhead crane= s=20 that operate with electromagnetic devices, which would fail if they lost=20 power suddenly. Falling materials could injure workers below, he said. "We= =20 have been asking to be exempt from rolling blackouts," he said. ?????Goncalvez said he couldn't put a price on the lost production at the= =20 24-hour plant and said he worried more about the long term. ?????"Two hours is nothing," he said. "My concern is this thing will start = to=20 happen almost every day. If it will be like this all summer, you can be sur= e=20 it will have dramatic consequences for the entire economy. . . . We're goin= g=20 to have a shortage of steel products in California. Maybe the government do= es=20 not consider this is serious. We'll see." ?????At Sport Chalet, a La Canada Flintridge-based chain of 22 sporting goo= ds=20 stores in Southern California, an administrative assistant monitors the sta= te=20 power situation, hoping to warn any stores that are in danger of losing=20 power, said Craig Levra, the company's chief executive. ?????Levra said the assistant was assigned the monitoring duties last year,= =20 when rolling blackouts were still only a threat. ?????The chain put in place an emergency plan--similar to what it would do = in=20 a major earthquake. Backup power will kick on emergency lights and allow th= e=20 cash registers to complete transactions. Employees are instructed to escort= =20 customers from the building safely, Levra said. ?????Other businesses, however, have plans to remain open during the 60- to= =20 90-minute blackouts. ?????When power went out at two Cheesecake Factory restaurants in Orange=20 County on Monday afternoon, the eateries switched to serving cold dishes su= ch=20 as sandwiches and salads, said Howard Gordon, senior vice president of the= =20 Calabasas Hills-based chain. ?????The restaurants had enough backup power to operate emergency lights an= d=20 cash registers. Large windows provided the rest of the light, Gordon said. ?????So far, the 99 Cents Only Stores chain has missed the shotgun pattern = of=20 the blackouts. But with nearly 100 stores in California, company President= =20 Eric Schiffer believes it is only a matter of time before the lights go out= =20 at one of its outlets. ?????Though the stores have some backup power, the chain has systems in pla= ce=20 to operate without it. Its cash registers can open mechanically, Schiffer= =20 said. Because an item sells for a multiple of 99 cents, sales clerks are=20 equipped with "blackout sheets" that calculate a customer's tab, including= =20 tax. All the clerk has to do is count the number of items in the shopping= =20 cart and check the tables on the sheet. ?????This week's power crunch has been exacerbated by the fact that so-call= ed=20 interruptible electricity customers no longer face large penalties if they= =20 decline to shut down their operations when supplies get critically low. ?????The Public Utilities Commission suspended the fines in January to ease= =20 the burden on about 1,400 businesses that found themselves bearing the brun= t=20 of the crisis to prevent rolling blackouts in the rest of the state. ?????According to Edison, about 10% of its interruptible customers are=20 complying with requests to curtail electricity usage during crunch time. Bu= t=20 Scott Keller isn't among them. ?????The owner of Chino-based STC Plastics Inc. said he was forced to shut= =20 down more than 20 times since September, costing him as much as $10,000 in= =20 lost production per day. He ignored requests Monday and Tuesday to curtail= =20 usage and said he doesn't feel a twinge of remorse. ?????"If I'm shut down, I can't pay my workers," he said. "I'd feel more=20 guilty about that." ?????But this is one area where insurance eventually might help. Moraga sai= d=20 some carriers are developing plans that would cover penalties for continuin= g=20 to use power after they have been asked by a utility to cut back. ---------------------------------------------------------------------------= --- -------------------------------------------------------------------------- Wednesday, March 21, 2001=20 A Blackout on Answers=20 Davis needs to do a better job in communicating to Californians about the= =20 electricity crisis. In the absence of that, cynicism grows.=20 ?????The oil shocks of the 1970s, from the Arab oil embargo to the Iran-Ira= q=20 war, were dead simple compared with the California power shortage. Then, th= e=20 problem was a lack of imported oil and the chief symptom was long lines and= =20 high prices at gas stations. Politicians urged conservation: Turn down the= =20 heat, drive fewer miles, buy more efficient cars. People understood the cau= se=20 of the crisis and the benefit of their actions. Today it's a different stor= y=20 and a damnably complicated one that gives consumers no place--or actually,= =20 too many places--to focus their anger.=20 ?????The last two days of rolling blackouts, including previously exempt=20 Southern California, have not reduced power demand, or at least not enough.= =20 Consumers are suspicious: Are out-of-state power companies holding back=20 production? Did utilities really not have enough money to pay alternative= =20 energy producers--the little guys who, combined, could produce enough power= =20 to prevent the blackouts? And what happened to long-term power contracts, t= he=20 state-bargained deal that was supposed to stabilize the crisis?=20 ?????The frustrations are vast, and there are too many gaps in the story. I= f=20 it's just a pack of thieves creating an artificial shortage, as even some= =20 consumer organizations charge, why should anyone sacrifice to conserve? Tha= t,=20 in a nutshell, is the problem that Gov. Gray Davis, the state Legislature a= nd=20 the Public Utilities Commission face.=20 ?????Davis, for one, has to level with the public and stop acting as if he= =20 can fix the crisis. He has proved he can't, at least not without reductions= =20 in usage and, most likely, rate increases. If Davis, who is notoriously=20 averse to delivering bad news, had leveled with the public about the=20 fragility of the current system, the last two days of blackouts statewide= =20 (except in places with full municipal power, like Los Angeles) might not ha= ve=20 come as such a shock.=20 ?????The Legislature tried and failed earlier to solve the alternative ener= gy=20 producers' nonpayment problems with a very complicated bill. Tuesday night,= =20 Davis and legislators announced a simpler plan that would set lower, more= =20 flexible rates for alternative power but also force the utilities to pay fo= r=20 future purchases.=20 ?????Which leads to the utilities themselves. With the state shelling out= =20 billions for power from the major generators, how could Southern California= =20 Edison and Pacific Gas & Electric still not have the cash flow to pay the= =20 alternative producers? That motley collection of biomass, solar, wind and= =20 cogeneration companies has been shutting down for nonpayment--some of them= =20 because natural gas suppliers have cut them off. PG&E has made some payment= s,=20 but SCE has paid zilch, though a spokesman says it hopes to strike a deal t= o=20 start paying this week.=20 ?????Without enough honest information, conspiracy scenarios fill the holes= .=20 Bad news is better than no news, something Davis seems not to quite realize= .=20 By today or Thursday, the weather will cool and some plants taken down for= =20 repair will come back online. The blackouts may cease but the crisis will b= e=20 just as deep as it was Monday and Tuesday. It is up to Davis to do a better= =20 job of persuasively explaining why. Otherwise, the cynicism grows.=20 ---------------------------------------------------------------------------= --- -------------------------------------------------------------------------- Wednesday, March 21, 2001=20 Rolling Blackouts: Blatant Extortion=20 ?????* Re "Rolling Blackouts Hit Southland for First Time as Production=20 Falls," March 20:=20 ?????So here we are, 22 years after the notorious gas shortage, having=20 another gun held to our head by an opportunistic energy consortium. Back in= =20 1979, we all had to wait in long lines just to pay more for gasoline. Now, = we=20 have to face food in our freezers thawing and simmering in our homes during= =20 hot summer days, just to earn the honor of paying more for electricity.=20 ?????Of course, as soon as the rates are up and the environmental concerns= =20 are shoved aside, watch how plentiful power will be. When is somebody in=20 government going to stand up for the consumer and stop this blatant form of= =20 extortion?=20 ?????JOHN JOHNSON=20 ?????Agoura Hills=20 * * * ?????So customers of PG&E and Edison are "shielded from soaring wholesale= =20 prices"? Some shield: turning off all our power without so much as a moment= 's=20 notice, endangering lives and disrupting businesses just to keep our=20 electricity prices unreasonably low. Let's lift the rate caps to get the=20 lights back on. And if I need to be shielded from soaring prices, I'll turn= =20 my own lights off.=20 ?????ANDREW LOWD=20 ?????Claremont=20 * * * ?????This state needs adequate, reliable electricity to run a diverse=20 economy. Both political parties and business interests are at fault. This= =20 crisis demands top priority, aimed at lasting solutions.=20 ?????The most immediate solution is fast-tracking of added generating=20 capacity. Freeway bridges were rebuilt in record time after the Northridge= =20 quake, so we know it can be done. That is the type of effort that is needed= ,=20 immediately.=20 ?????Since Democrats hold the governorship and control both state legislati= ve=20 houses, they are in the driver's seat. If the lights go out, the Democrats = go=20 out. If this state government can't solve the problem, we need a new=20 government that can.=20 ?????STEVE ANDERSON=20 ?????Huntington Beach=20 * * * ?????The alleged energy crisis in California is entirely contrived to relax= =20 environmental pollution standards and to raise energy rates. It's curious= =20 that the L.A. Department of Water and Power, which was not deregulated, is= =20 not currently experiencing an energy crisis. PG&E and Edison are both part = of=20 national and multinational corporations. Why should utility customers have = to=20 pay for their economic problems or gross mismanagement?=20 ?????Several power plants were taken off-line for "routine maintenance,"=20 which may not have been so routine. Energy is a vital necessity; if these= =20 companies can't provide it at a reasonable, affordable rate then they shoul= d=20 be replaced by companies that can, be taken over by the government, or=20 de-deregulated. There is an abundance of solar energy in California, of whi= ch=20 only a small fraction is being utilized. There is no shortage of energy in= =20 California, only a shortage of intelligence, will and honest politicians.= =20 ?????CHARLES B. EDELMAN=20 ?????Los Angeles=20 ---------------------------------------------------------------------------= --- -------------------------------------------------------------------------- Utilities' Demand Blocks Bailout=20 NEGOTIATIONS HIT SNAG: PG&E, Edison want end to price freeze if they sell= =20 transmission lines to state David Lazarus, Chronicle Staff Writer Wednesday, March 21, 2001=20 ,2001 San Francisco Chronicle=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/03= /21/M N114450.DTL=20 California's near-bankrupt utilities are demanding that higher electric rat= es=20 be a part of any deal to sell the state their power lines, The Chronicle ha= s=20 learned.=20 A rate increase -- perhaps of more than 50 percent, according to earlier=20 industry estimates -- would certainly draw a firestorm of protest from=20 consumer groups and force Gov. Gray Davis to backtrack from earlier pledges= =20 that rates would remain unchanged.=20 Nevertheless, sources close to negotiations on the deal said Pacific Gas an= d=20 Electric Co. and Southern California Edison are attempting to make higher= =20 rates a condition for agreeing to a bailout scheme in which they would sell= =20 the state their transmission systems and some land.=20 The sources said the talks hit a new snag this week when state officials=20 realized that fine print sought by the companies could require the Public= =20 Utilities Commission to pass along all of the utilities' costs to ratepayer= s.=20 The sources said this would end a rate freeze that shields consumers from= =20 runaway wholesale electricity prices.=20 The inclusion of potential rate increases in the talks reflects the growing= =20 complexity of a deal originally intended by Davis to stabilize the finances= =20 of PG&E and Edison so banks would resume loans to the cash-strapped=20 utilities.=20 The negotiations subsequently have expanded to involve a state purchase of= =20 the utilities' transmission networks and acquisition of utility-owned land,= =20 including spectacular coastal property near PG&E's Diablo Canyon nuclear=20 power plant.=20 Now they also have embraced further deregulation of California's=20 dysfunctional electricity market.=20 "Clearly, one of the terms being discussed is the regulatory environment,"= =20 said Joseph Fichera, head of Saber Partners, a New York investment bank tha= t=20 is advising Davis in the talks.=20 "The past situation has not worked well," he added. "The utilities want som= e=20 certainty about their future."=20 TENTATIVE DEAL WITH EDISON To date, the governor has announced a tentative agreement with Edison for t= he=20 state to buy the utility's power lines for almost $3 billion. Discussions= =20 with PG&E for a similar accord have dragged on for weeks.=20 An Edison official, asking that his name be withheld, acknowledged yesterda= y=20 that an end to the rate freeze is an expected result of the power- line sal= e.=20 "Once the details of the pact are complete, dominoes will fall," the offici= al=20 said. "One of the dominoes is the rate freeze."=20 A PG&E spokesman declined to comment.=20 In fact, both Edison and PG&E have been aggressively seeking an end to the= =20 rate freeze for months.=20 The two utilities have a lawsuit pending in federal court demanding that th= e=20 PUC immediately raise rates so the utilities can recover almost $13 billion= =20 in debt accrued as a result of the freeze.=20 "They have been trying a lot of things to get the rate freeze ended in=20 various forms," said Carl Wood, who sits on the PUC. "Adding it to the=20 present talks is consistent with past behavior."=20 Wall Street has taken note that the negotiations no longer appear to be=20 making progress.=20 Paul Patterson, an energy industry analyst at Credit Suisse First Boston,= =20 told clients on Monday that the discussions "may have lost some momentum in= =20 recent days." He did not give a reason.=20 For his part, the governor sounded unusually cautious about the course of t= he=20 talks when asked late last week if a breakthrough was imminent.=20 SECRET STICKING POINTS "We are going to take the transmission systems and the land that's deeded,= =20 and we will work out an agreement," Davis said at an appearance in San Jose= .=20 "But there are a number of sticking points in the talks with PG&E that I'm= =20 not going to reveal."=20 One of those sticking points apparently is an insistence that the sale of= =20 utility assets include a long-sought lifting of the rate freeze.=20 Sources said lawyers from both PG&E and Edison had inserted the related ter= ms=20 into draft accords affecting each utility, and that the full impact of the= =20 additions was not realized by state officials until this week.=20 One source said the language was just convoluted enough to slip beneath the= =20 radar screen of state negotiators. But the upshot, once the words had been= =20 parsed, was that the PUC effectively would lose control over power rates.= =20 CREDITWORTHINESS ON THE TABLE In Edison's case, the terms of the tentative deal include the governor aski= ng=20 the PUC "to support the creditworthiness" of the utility.=20 "This would ensure that future investments in both utility distribution and= =20 utility generation plants are provided fair returns of and on capital,=20 consistent with current authorized returns and capital structure provisions= ,"=20 it says.=20 Sources said the provision could be interpreted as a guarantee from the sta= te=20 that Edison would be permitted to recoup all outstanding costs from=20 ratepayers.=20 "There may be some assumptions about this language that the rate freeze end= s=20 if it is adopted," the Edison official said, adding that he saw no reason t= o=20 disagree with such assumptions.=20 But Fichera, Davis' adviser in the talks, insisted that nothing is set in= =20 stone, and that the negotiations are proceeding without a hitch.=20 "This is a very complex transaction," he said. "God and the devil are in th= e=20 details."=20 E-mail David Lazarus at dlazarus@sfchronicle.com.=20 ,2001 San Francisco Chronicle ? Page?A - 1=20 ---------------------------------------------------------------------------= --- ---------------------------------------------------------------------------= --- -------------------------------------------------------------- Utilities' Demand Blocks Bailout=20 BLACKOUTS ROLL ON: Weather, increased consumption blamed=20 David Lazarus, Chronicle Staff Writer Wednesday, March 21, 2001=20 ,2001 San Francisco Chronicle=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/03= /21/M N156508.DTL=20 Hundreds of thousands of Californians went without electricity for a second= =20 day yesterday as unusually warm weather and a high number of idle power=20 plants prompted blackouts throughout the state.=20 State officials said electricity usage rose yesterday even though condition= s=20 were largely unchanged from a day before. They surmised that fewer=20 Californians were conserving power.=20 "We need people to really focus on that," implored Patrick Dorinson, a=20 spokesman for the Independent System Operator, manager of the state's power= =20 grid. "The more people can do, the better it will be."=20 Rolling blackouts were ordered by the ISO about 9:30 a.m. and were suspende= d=20 at 2 p.m. after several plants that had been down for repairs returned to= =20 service. Additional power also was obtained from a plant in Arizona.=20 Utilities estimated that about 560,000 customers were affected yesterday,= =20 compared with more than 1 million a day earlier.=20 This week's blackouts marked the first time that people in Los Angeles shar= ed=20 the pain with those in San Francisco. Blackouts in January were confined to= =20 the northern part of the state.=20 FEWER AFFECTED IN SOUTH However, Southern California Edison's burden was considerably lighter=20 yesterday than that of Pacific Gas and Electric Co.=20 Karen Shepard-Grimes, a spokeswoman for the Southern California utility, sa= id=20 only about 50,000 customers went without power, compared with nearly 440, 0= 00=20 for PG&E.=20 Affected areas in the south included Palm Springs, Santa Monica, Long Beach= =20 and Pomona.=20 "We're not in the business of turning customers' lights off," Shepard- Grim= es=20 said. "We're in the business of keeping lights on."=20 In PG&E's case, things were tougher because low rainfall means that less=20 power is currently available from dams throughout the Pacific Northwest.=20 Ron Low, a spokesman for the utility, said blackouts were experienced by PG= &E=20 customers from Eureka to Bakersfield.=20 "Our goal was to carry out the ISO's order with minimal impact on customers= ,=20 " he said.=20 For its part, San Diego Gas & Electric said about 75,000 customers were=20 darkened.=20 Yesterday's blackouts began with PG&E customers in Block 12 and halted midw= ay=20 through Block 14. Customers in each block -- defined by power circuits rath= er=20 than geography -- typically will lose power for about 90 minutes before the= =20 service interruption "rolls" elsewhere.=20 Some cutoffs can last more than two hours, however, because of technical=20 problems switching individual blocks on and off.=20 NEXT UP: BLOCK 14 If additional blackouts are ordered today, they will commence with the=20 remaining portion of Block 14 customers. (PG&E customers can determine thei= r=20 block by looking at the bottom left-hand corner of their monthly bill.)=20 The ISO's Dorinson said it is hoped that cooler weather and increased=20 generation will help avert further cutoffs this week.=20 "Units are coming back into service that have been out," he said. "That wil= l=20 help a great deal."=20 Roughly 15,000 megawatts of generating capacity was offline yesterday,=20 including half of the alternative-energy plants, which are unable to afford= =20 natural gas to run their turbines.=20 Many of the plant owners say they have not been paid by PG&E and Edison sin= ce=20 November. They are asking federal regulators for permission to sell their= =20 electricity elsewhere.=20 At the same time, one of two units at the Mohave Generating Station in Neva= da=20 damaged in a fire Monday returned to service yesterday, easing the load on= =20 California's grid.=20 The plant, partly owned by Edison, is not expected to return to full output= =20 until tomorrow.=20 PROBING SHUTDOWNS Nearly a third of California's generating capacity is currently down for=20 scheduled or unexpected maintenance. State regulators are investigating=20 whether some plant owners might be deliberately shutting down to drive pric= es=20 higher or reduce operating costs.=20 Loretta Lynch, president of the Public Utilities Commission, on Monday call= ed=20 the number of idle plants "highly suspicious."=20 Dorinson at the ISO said that about 12,000 megawatts of mainstream capacity= =20 was offline yesterday, compared with roughly 10,000 megawatts last year at= =20 this time.=20 --=20 Tell Us What You Think=20 Can you save 20 percent on your energy usage? Gov. Gray Davis is offering= =20 rebates for Californians who save on power starting in June, and if you've= =20 got a strategy for conserving, The Chronicle wants to hear it. We'll be=20 writing about the hardest-working energy savers in a future story. To get= =20 involved, Write to the Energy Desk, San Francisco Chronicle, 901 Mission St= .,=20 San Francisco, 94103; or e-mail energysaver@sfchronicle.com.=20 --=20 THE ENERGY CRUNCH -- Blackouts: About 560,000 Californians, including 440,000 in Northern=20 California, lost electricity yesterday for 90 minutes at a time.=20 -- Areas affected: Blackouts hit parts of blocks 12 and 14 and all of block= =20 13 yesterday. In the event of further blackouts, the remainer of block 14= =20 would be next, followed by block 1.=20 -- Outlook: Officials say blackouts are less likely today as temperatures a= re=20 expected to cool and power plants that have been offline for maintenance=20 resume generating electricity.=20 E-mail David Lazarus at dlazarus@sfchronicle.com.=20 ,2001 San Francisco Chronicle ? Page?A - 1=20 ---------------------------------------------------------------------------= --- ---------------------------------------------------------------------------= --- -------------------------------------------------------------- Manners Go Out the Window=20 Pedestrians in peril as drivers turn darkened S.F. streets into free-for-al= l=20 Steve Rubenstein, Chronicle Staff Writer Wednesday, March 21, 2001=20 ,2001 San Francisco Chronicle=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/03= /21/M N173178.DTL=20 Nobody got plowed into yesterday at Fifth and Howard streets in San=20 Francisco. Many came close.=20 The power outage that darkened the traffic lights at the frenetic South of= =20 Market intersection for more than an hour also darkened the souls of untold= =20 numbers of drivers, sending motoring manners into the toilet.=20 The law says motorists are supposed to treat an intersection with=20 nonfunctioning traffic lights as a four-way stop. That means everyone stops= ,=20 then takes turns -- one by one -- creeping through the intersection.=20 Tell that to the two people in motorized wheelchairs who were nearly creame= d=20 by two eastbound SUVs.=20 Or to the young Swedish couple who had traveled halfway around the globe,= =20 only to scamper through the intersection barely ahead of an office supply= =20 truck.=20 Or to the New Jersey tourist, who proclaimed that California drivers during= =20 power outages were proof positive that the Chaos Theory lives and breathes.= =20 Some motorists stopped and took turns, but many didn't. Some sped into the= =20 intersection immediately behind the vehicle in front, without themselves=20 stopping at the white line. Some sailed through with a rolling stop and a= =20 warning honk. Some blasted through without stopping or honking.=20 "I'm scared to death," said Brian Walters of Dorchester, N.J., after making= =20 it across Howard Street. "This is organized madness. I subscribe to the Cha= os=20 Theory, and this is what it looks like."=20 Sydney Freedman, a tourist from Sydney, walked briskly across the darkened= =20 crossroads, smiling grimly.=20 "I'll chance it," he said.=20 He looked back and saw a woman in a motorized wheelchair nearly get squishe= d=20 by a westbound Chevy.=20 "You have to be authoritative in this town when you cross the street," he= =20 said. "Especially that lady."=20 Therese Anderson and Andreas Sandstrom, from Sweden, raced across as quickl= y=20 as their backpacks would allow.=20 "In this country, everyone is in such a hurry," said Anderson.=20 "Everybody drives like a madman," added Sandstrom. "They say, 'I want to be= =20 home right now, and I don't care what happens to anyone else.' "=20 The couple paused to gaze in wonder at the intersection, learning more abou= t=20 America in five minutes than a pile of guidebooks could tell them.=20 "This intersection," said Sandstrom, "reminds you not to take life for=20 granted."=20 A few minutes later, Parking Control Officer Tom Butz arrived in his meter= =20 minder wagon and pulled his orange vest and whistle from the saddlebag. He= =20 strode brave and true into the center of the bullring, planted himself=20 between the whizzing cars and began waving his arms as if conducting "The= =20 Rite of Spring."=20 "I'm all by myself," he said. "I know it's a little risky. I'd better keep = my=20 angels with me."=20 At that moment, the angels were on duty in Menlo Park, where a blacked-out= =20 intersection at El Camino Real and Santa Cruz Avenue backed up traffic so f= ar=20 that it stretched into neighboring Atherton.=20 "It's a large intersection and traffic is slow anyway, but now it is severe= ly=20 impacted," said Police Sgt. Terri Molakides. "We don't get any warning=20 either. When the power is out, the power is out. It's not like we can make= =20 any plans."=20 In general, motorists seemed more likely to obey the four-way-stop rule on= =20 the Peninsula and in the East Bay than in San Francisco.=20 In San Mateo County, some police departments have stopped trying to make=20 advance plans to cover darkened intersections. San Mateo Police Sgt. Kevin= =20 Rafaelli said putting up signs and posting officers sometimes caused proble= ms=20 rather than solving them.=20 "If people just follow the law (and) stop at the intersection, they can=20 handle it better than we do if we're out there," he said. "People are sort = of=20 getting used to it and are dealing with it."=20 In Berkeley and Emeryville, motorists stopped one at a time at temporary st= op=20 signs, with no apparent problems. At University Avenue and Sacramento Stree= t=20 in Berkeley, Officer Matt Meredith said motorists were behaving themselves.= =20 That wasn't the case a while back, when a driver who didn't stop at an=20 intersection during a blackout was broadsided by someone who did, Meredith= =20 said.=20 "The thing to remember is to stop and look," he said.=20 TRAFFIC TIPS To avoid a collisions during blackouts, the California Highway Patrol offer= s=20 this advice to motorists:=20 -- Treat any intersection with inoperative traffic lights as a four-way sto= p.=20 Each vehicle must stop when arriving at the white limit line, then proceed= =20 only when safe, taking turns.=20 -- If two vehicles arrive at the intersection at the same time, the motoris= t=20 on the left must yield to the motorist on the right.=20 -- Never insist on taking the right of way, even if you are entitled to it.= =20 -- Follow the directions of a police officer or traffic control officer,=20 whose directions take precedence over lights or signs.=20 Chronicle staff writers Henry K. Lee and Matthew B. Stannard contributed to= =20 this report. / E-mail Steve Rubenstein at srubenstein@sfchronicle.com.=20 ,2001 San Francisco Chronicle ? Page?A - 8=20 ---------------------------------------------------------------------------= --- ---------------------------------------------------------------------------= --- -------------------------------------------------------------- Historic Blackouts in State=20 Bay Area learns to cope=20 Jonathan Curiel, George Raine, Justino Aguila, and Matthew B. St Tuesday, March 20, 2001=20 ,2001 San Francisco Chronicle=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/03= /20/M N219412.DTL=20 Today's rolling blackouts caused concern throughout the Bay Area, including= =20 Colma, where the sudden lack of power apparently caused a fire.=20 A light fixture at the Home Depot store in Colma caught fire around 10:45 a= .=20 m., 15 minutes after Pacific Gas and Electric Co. ordered blackouts for the= =20 area. No one was hurt.=20 "I was in the back of the store when the power outage started," said Dave= =20 Cole, a consultant from Pacifica who was shopping for bolts and screws. "We= =20 lost maybe 90 percent of the lights, then maybe 10 percent of the lights ca= me=20 up. Then I heard a guy saying, 'Get a ladder, get a ladder!'=20 "One of the lights on the ceiling had caught on fire, and a couple of peopl= e=20 were getting ladders and fire extinguishers."=20 Store managers whisked everyone out of the store, and Colma firefighters=20 arrived to make sure the blaze was extinguished.=20 At 11 a.m., Cole was waiting to get back into the store, which was still=20 closed.=20 "I need my bolts," he said.=20 Elsewhere, the San Francisco Fire Department had to rescue people stuck in = an=20 elevator at 2001 Embarcadero North, said fire department spokesman Pete=20 Howes.=20 Scores of residents and businesses near the Embarcadero, including the Levi= =20 Strauss & Co. headquarters, were affected by the blackout.=20 At Levi Strauss this morning, Phil Marineau, the president and chief=20 executive officer, led his 1,300 employees by example, using only minimal= =20 lighting for a meeting in his office at 10 a.m.=20 Employees were sent e-mails minutes after PG&E's 9:30 a.m. notification tha= t=20 a blackout was possible. The e-mails said workers should frequently save wo= rk=20 on their computers, and that they should remain in the building and stand b= y=20 for further instructions.=20 Emergency lighting in hallways and stairwells were operated by generators.= =20 All elevators descended to the ground floor but one remained operating,=20 through a generator.=20 "Worked nicely," said Jeff Beckman, a company spokesman.=20 Yesterday -- the first day that rolling blackouts returned -- Shannon=20 Cashman's home in Walnut Creek was a difficult place to be.=20 Cashman's 4-year-old daughter, Madison, suffers from a brain defect that=20 stops her from breathing during sleep. The girl depends on a ventilator tha= t=20 runs on electricity.=20 Recently hospitalized and with a weakened immune system, Madison badly need= ed=20 a nap yesterday afternoon. But when the Cashmans' power went out about noon= ,=20 it meant reading and coloring instead of rest for the girl and a little mor= e=20 anxiety than normal for her mother.=20 "If this was a major earthquake or something like that and we couldn't use= =20 the ventilator, we'd take her to the hospital," said the 33-year-old Cashma= n.=20 "Otherwise, we'll just wait for the power to come back on."=20 In a stroke of irony yesterday, the lights went out and computer screens we= nt=20 dark at the San Francisco offices of the state Public Utilities Commission,= =20 the agency some people blame for the energy crisis and others look to for t= he=20 solution.=20 At a Petco animal store in Redwood City, nocturnal leopard geckos that=20 weren't familiar with the state's power woes thought it was night and awoke= =20 from their routine daytime slumber.=20 The geckos clung to the glass of their cages as manager Sally Daine and her= =20 employees misted lizards and watched frozen mealworms melt.=20 "The worst thing is some of the reptiles need heat, but it's so hot, I don'= t=20 think it will matter," she said.=20 At Auto Pride Car Wash a few blocks away, Dan Giudici watched as the team o= f=20 employees he supervised washed cars the old-fashioned way -- with buckets a= nd=20 hoses. The company's big mechanical car wash went unused.=20 Customers didn't seem to mind the manual wash, said Giudici, who was chargi= ng=20 half-price. But he was running out of towels.=20 Even those who hoped they were immune to power problems were affected.=20 Palo Alto runs its own utility, but the electricity began winking out about= =20 12:30 p.m.=20 The city depends on a distribution line of the state grid, so it is=20 vulnerable to blackouts, said Linda Clerkson, public relations manager for= =20 Palo Alto Utilities. In addition, the city relies on PG&E for some of its= =20 power, she said.=20 Businesses were caught by surprise.=20 "Well, at least it happened in a better time than the morning," said Nick= =20 Badiee, owner of the Lytton Roasting Co. coffee house. "My toaster went out= =20 and the coffee began getting cold, so I lost three or four people who walke= d=20 out the door. I'm not angry, yet, but I would say I am concerned."=20 For one Milwaukee woman visiting San Francisco, the blackout was an=20 unexpected lesson in the problems of electricity deregulation.=20 Cindy Wilburth, a financial consultant who advises Wisconsin utilities, cam= e=20 to the Bay Area for vacation but left yesterday with important research for= =20 her job.=20 "This has been a huge learning lesson for Wisconsin," Wilburth said as she= =20 waited for a bus outside the powerless Comfort Inn by the Bay in Cow Hollow= .=20 Wilburth said her state and others that once eyed deregulation are now=20 backing off.=20 "It just makes me realize how we've gotten ourselves in a pinch in a free= =20 economy," she said.=20 As she mused about the predicament in which the state has found itself, her= =20 friend was just thankful to get out of here.=20 "I love the cold, compared to this," said Cindy Stuckey of Milwaukee. "At= =20 least I know I can stay in my home, secure and warm."=20 Across the street, at the Travelodge By the Bay, Rolando Gutierrez had=20 already lost three guests just an hour into the blackout.=20 "This is the richest state and this is a rich city -- plenty of people want= =20 to come here," he said. "We shouldn't be suffering these blackouts."=20 Chronicle staff writers Jaxon Van Derbeken, Mark Martin, Henry K. Lee,=20 Michael McCabe, Bernadette Tansey and Marshall Wilson contributed to this= =20 report.=20 ,2001 San Francisco Chronicle ? Page?A - 1=20 ---------------------------------------------------------------------------= --- ---------------------------------------------------------------------------= --- -------------------------------------------------------------- Bay Area residents learning to roll with blackouts=20 Posted at 9:58 p.m. PST Tuesday, March 20, 2001=20 JOHN=20 WOOLFOLK=20 AND STEVE=20 JOHNSON=20 Mercury News=20 As rolling blackouts swept the state for a second straight day Tuesday,=20 Californians already seasoned by droughts and earthquakes were learning to= =20 live with yet another upheaval: periodic power outages.=20 Blackouts are still a novelty in Southern California -- hit for the second= =20 time Tuesday -- but they're almost routine for Bay Area residents who have= =20 seen four days of outages this year and now expect many more as temperature= s=20 rise. Toting flashlights, avoiding certain roads and even shutting off thei= r=20 coveted hot tubs, they're adjusting to life in California's new Dark Age.= =20 ? ? Karen T. Borchers--Mercury News When the lights went out at Grant Elementary School in San Jose on Tuesday= =20 morning, teacher Renee Johnson took her second-grade students out to the la= wn=20 to read to them. Marjorie Meagher now looks at her clock before taking the elevator she need= s=20 to get around her two-story San Jose home, fearing she'll get stuck during= =20 rolling blackouts.=20 ``They tend to happen on the hour or half-hour, so I try not to use it=20 then,'' said Meagher, 74, who is disabled. ``I'm very careful. My own=20 personal fear is getting stranded in the elevator.''=20 From 750,000 to about 1 million customers lost power for an hour or so in= =20 stages Tuesday as a rash of power plant outages and record temperatures in= =20 San Jose and elsewhere triggered a critical shortage.=20 As was the case Monday, when 1.2 million to 1.8 million customers were=20 affected, Tuesday's outages were split between the northern and southern=20 parts of the state. Blackouts began at 9:30 a.m. and lasted until 2 p.m. wh= en=20 authorities obtained extra power from other Western states. Outages were=20 considered less likely today.=20 But people are preparing anyway. Like low-flow toilets and earthquake kits,= =20 flashlights and generators may be emerging as another fact of life in the= =20 Golden State.=20 In San Francisco's Inner Sunset district, Han Yong Park had the satisfied= =20 smile of a well-prepared man having bought a portage generator for his Park= 's=20 Farmers Market five months ago.=20 Tuesday morning, the generator churned loudly on the sidewalk, positioned= =20 between the tomatoes and green beans. Inside, clerks tallied purchases on= =20 electric cash registers.=20 Park motioned down the street, where neon signs were dark and some=20 restaurants closed. ``No one else in the area has a generator,'' he said.= =20 Energy officials say such equipment will come in handy this summer. Power= =20 supplies are expected to be so strained that Californians should expect man= y=20 more rolling blackouts.=20 ``I don't want to kid anybody,'' said Patrick Dorinson, spokesman for the= =20 California Independent System Operator, which manages the power grid for mo= st=20 of the state. ``Supplies are very, very tight. When you look at such a big= =20 state and such a large shortfall, I think we have to prepare ourselves. It'= s=20 very possible that going into this spring and summer we're going to see som= e=20 very difficult days.''=20 Combination of factors=20 The multiple causes that conspired to darken California on Tuesday=20 underscored the difficulty officials face in keeping the lights on.=20 The thermometer shot to record-breaking levels at some locations in the Bay= =20 Area, driving up power demand. San Jose hit 83, compared with an average 66= =20 degrees for March 20, and breaking the record high of 80 set in 1960.=20 What's more, 12,000 megawatts of power were unavailable because plants had= =20 shut down for maintenance or because cash-strapped utilities haven't paid= =20 them.=20 And consumer conservation has been spotty. While state energy officials say= =20 conservation rose from 5 percent in January to 8 percent in February, grid= =20 managers said this week Californians weren't saving enough energy. They eve= n=20 revised their estimate of how much homes a megawatt can power, down from=20 1,000 homes to 750 to reflect greater consumption.=20 Improved conservation later in the day helped stave off a second wave of=20 outages, they said.=20 Many shrug off the threat of rolling blackouts.=20 ``I think I've gotten used to it,'' said Mary Carlson, 58, of San Jose, who= =20 took her granddaughter for a walk and read the paper during blackouts in=20 January. ``I just go with the flow. I'm not going to get too excited about= =20 it. If they turn the power off, it's no big thing.''=20 Erica Finn, secretary at Acacia Glass in San Francisco, said she wasn't too= =20 upset when blackouts shut down the credit card machines, electric sanders a= nd=20 phones. She bought coffee, pulled a chair into the sun and popped Madonna= =20 into her portable CD player.=20 ``I have to brush up on my tan, and get paid for it,'' she said.=20 But for others, the consequences are potentially serious.=20 At a Palo Alto dental office, the blackouts interrupted root canals for thr= ee=20 patients. Dentists Darrell Dang, Robert McWilliams and Kurtis Finley insert= ed=20 temporary fillings by hand, rescheduled the procedures, and went to lunch.= =20 The receptionist used a cell phone to cancel the afternoon's appointments,= =20 frustrated that there's no way to prevent a repeat of Tuesday's fiasco if t= he=20 blackouts continue.=20 A new routine=20 Others have taken everyday steps to cope with the threat of losing power.= =20 Stephen O'Reilly, a 34-year-old San Jose engineer who often drives to see= =20 clients, said he avoids side streets because blackouts could darken signal= =20 lights and tie up intersections.=20 ``I used to take back roads to avoid traffic, but I'm trying to use the=20 freeways more because there are no lights,'' said O'Reilly, adding that he'= s=20 shut down his electric hot tub to help conserve power.=20 At Pasta Primavera in San Mateo, manager Chris Harris has stocked up on=20 candles and has plans to buy a generator for his restaurant. When blackouts= =20 arrived just before the lunch crowd Tuesday and cut power to ventilation=20 fans, he even considered revising his menu, replacing smoke-producing chick= en=20 and shrimp with simple marinaras and alfredos.=20 ``I don't know if you'd want to dine with the smell of smoke,'' Harris said= =20 as customers trickled into his darkened restaurant on Fourth Avenue. ``If= =20 this is going to continue through the summer, it's going to affect our=20 pockets.''=20 San Francisco International Airport, which agreed months ago to shut down i= ts=20 massive air conditioners to save power during shortages, is now routinely= =20 stuffy.=20 On Tuesday the temperature reached a steamy 85 degrees inside the airport's= =20 North Terminal, which serves most of United Airlines' flights.=20 ``It's become uncomfortable if not intolerable,'' said Ron Wilson, airport= =20 spokesman. ``It's like getting in a car that's been left in the sun all day= .=20 It's much hotter inside. .?.?. We've turned on the fans but they're just=20 moving the hot air.''=20 Hospitals cut off=20 Several hospitals complained they lost power Tuesday, saying they thought= =20 they were exempt. PG&E said hospitals with sufficient backup generation to= =20 power themselves can be turned off. But state regulators said they could no= t=20 confirm that statement, and hospital officials scoffed at the suggestion.= =20 ``Every hospital has backup power generation, but it only covers 30 to 40= =20 percent of the hospital,'' said Roger Richter, a senior vice president with= =20 the Hospital Council.=20 Nonetheless, hospitals are coping with the situation.=20 ``Our patients are concerned, for sure,'' said Jackie Floyd, head nurse at= =20 the Satellite Dialysis Center South in San Jose, which lost power. ``But=20 while it's a pain, we can handle the blackouts. We're kind of getting the= =20 idea here that this a problem and we have to adjust.''=20 But while Californians may be adjusting, they're not at all pleased.=20 ``I'm frustrated with this power thing,'' said Ana Rivera, who manages the= =20 Wash Club in San Francisco, where washers and dryers had stopped mid-cycle.= =20 ``Who do you blame? No one wants to accept blame.'' Sara Neufeld, Ann Marimow, Kim Vo, Frank Sweeney, Barbara Feder, Aaron Davi= s,=20 Gil Duran, and Dave Beck contributed to this report.=20 ---------------------------------------------------------------------------= --- ---------------------------------------------------------------------------= --- -------------------------------------------------------------------------- Powerless, again=20 Outages were lighter after generators came back online and conservation=20 efforts kicked in. Blackouts may be averted today.=20 March 21, 2001=20 By TONY SAAVEDRA, JOHN HOWARD, CHRIS KNAP and JEFF COLLINS The Orange County Register=20 The Ridgewood Power methane-burning plant at the Olinda Alpha landfill in= =20 Brea is producing 3.3 megawatts, down from five, because Edison owes it $1.= 5=20 million and cranking up to full power is no longer a priority Photo: H. Lorren Au Jr. / The Register ? ? A second day of statewide blackouts ratcheted up the frustration level=20 Tuesday on the streets of Orange County and in Sacramento, as consumers=20 demanded solutions from politicians unable to give them.=20 There was a bit of good news, though: Blackouts may be averted for the rest= =20 of the week after temperatures moderated, two stalled generators came back= =20 online and conservation efforts kicked into gear.=20 ?=20 Some Orange County residents took the blackouts in stride. In Mission Viejo= ,=20 above, the West Coast Football Club's under-16 boys team scrimmages under= =20 gas-powered lights Tuesday. The club has been running to conserve energy=20 Photo: Kevin Sullivan / The Register ? ? Consumers were able to save 900 megawatts - enough to light about 675,000= =20 homes - by cutting power usage, said Patrick Dorinson, spokesman for the=20 Independent System Operator, which oversees 75 percent of the state's=20 electricity grid. That helped the ISO halt the blackouts Tuesday afternoon.= =20 "Californians are back on the conservation trail, and we appreciate it,"=20 Dorinson said.=20 Power regulators Tuesday morning predicted there would be twice as many=20 outages as Monday, when more than 1 million consumers statewide lost power = in=20 one-hour to 90-minute increments.=20 Luis Pagan, an assistant at the Santa Ana Animal Shelter, waits out the=20 blackout Tuesday with one of the shelter's dogs up for adoption Photo: Paul E. Rodriguez / The Register ? ? Beginning at 9:30 a.m. Tuesday, blackouts tangled intersections in Costa=20 Mesa, forced Huntington Beach students to study by flashlight and stilled= =20 cash registers in Santa Ana. About a half-million homes and businesses were= =20 unplugged statewide before 2 p.m. Power was restored to most of Southern=20 California by 11:30 a.m. Outages affected more than 9,200 consumers in Oran= ge=20 County.=20 The ISO had expected more severe outages to hit at the peak hour of 7 p.m.,= =20 but was able to keep the lights on as downed power plants came back online= =20 and imports from other states increased.=20 While outages were lighter than Monday, the blackouts aggravated consumers= =20 who doubted that Gov. Gray Davis, lawmakers and electricity officials are= =20 doing enough to keep the power flowing in California.=20 ?=20 Zulema Avarez, left, and Erica Ramirez said they were caught off-guard when= =20 the power went out, so they closed the fashion store in Santa Ana where the= y=20 work Photo: Paul E. Rodriguez / The Register ? ? "I think this is insane," said Charlee Lang, 63, of Costa Mesa. "Gray Davis= =20 didn't do his job for a long time; he didn't get serious until November. We= =20 need to demand immediate action be taken."=20 Bill Brannick, 65, of Costa Mesa, added: "There's a lot of complicity here= =20 and we're just innocent victims."=20 Davis, in a Sacramento news conference, said he inherited California's fail= ed=20 experiment with electricity deregulation, enacted in 1996 under former Gov.= =20 Pete Wilson.=20 "I think a fair assessment of this situation is that we were dealt a pretty= =20 bad hand here," Davis said. "No (new power) plant was approved in the 12=20 years prior to my being governor."=20 With summer peak demand expected to be 16,000 megawatts higher than Monday= =20 and Tuesday, more days of blackouts are forecast for coming months. Though= =20 Davis has signed long-term contracts to provide California with reliable=20 energy, the deals haven't yet taken effect. Some suppliers won't start=20 providing electricity until the state reaches a so-far elusive agreement to= =20 help the utilities pay off billions in debt by buying their transmission=20 lines.=20 Assembly Republican Leader Bill Campbell, R-Villa Park, said that the effor= t=20 to resolve the "state's energy crisis was floundering in the midst of unpai= d=20 bills, stalled negotiations and rolling blackouts."=20 Tuesday began with 29 percent of California's power supply off line, mostly= =20 from generating plants suddenly down for unscheduled maintenance. About 3,0= 00=20 megawatts was missing from so-called qualifying facilities, or small power= =20 producers who have not been paid $1.8 billion by cash-strapped utilities an= d=20 say they can't afford to operate. Davis said he would ask the PUC to order= =20 utilities to begin paying the qualifying facilities for any energy supplied= =20 beginning April 1, but the payments would not apply to the outstanding debt= .=20 Some smaller producers threatened to force Edison into involuntary bankrupt= cy=20 if they are not paid soon.=20 Blackouts began Tuesday two hours earlier than on Monday, as the ISO called= =20 on utilities to dump 500 megawatts. It was only the second day of blackouts= =20 for Southern California, but the fourth for Northern California since=20 January.=20 The Disney Resort, which includes Disneyland and the new California=20 Adventure, voluntarily cut back one megawatt of electricity on Monday and= =20 again Tuesday, said Anaheim Public Utilities.=20 All of the reductions were in backstage areas not seen by guests, said Disn= ey=20 spokeswoman Chela Castano-Lenahan.=20 In other workplaces, people tried to make do.=20 Flashlight beams bobbed in aisles at a Target in Santa Ana, where the power= =20 stopped at 10:30 a.m. Workers escorted customers, who continued shopping an= d=20 made their purchases at battery-powered cash registers. Customers were=20 eventually asked to leave when the batteries ran low.=20 "Oh well; no soda, no sunglasses," said one woman as she headed back to her= =20 car.=20 The Metro Pointe shopping center in Costa Mesa also went dark.=20 "I was in the middle of making a reservation when everything went out," sai= d=20 Peggy Thomas, a sales executive for Travel of America, along South Coast=20 Drive. "All of us here went, 'Oh no, it's happened to us.' "=20 Said one Costa Mesa police officer, as he headed for his motorcycle and a= =20 blackout-related fender bender: "You can thank the governor for that one."= =20 At Hawes Elementary School in Huntington Beach, Principal Marie Smith was= =20 demonstrating to her third-grade class what would happen in a blackout. But= =20 before she could flip off the light switch, the power died.=20 The kids thought she was joking.=20 Register staff writers Tiffany Montgomery, Sarah Tully Tapia, Nancy Luna, J= im=20 Radcliffe, Binh Ha Hong, Theresa Salinas, Eric Johnson and Danielle Herubin= =20 and the Associated Press contributed to this report.=20 ---------------------------------------------------------------------------= --- ---------------------------------------------------------------------------= --- --------------------------------------------------------------------- The iceman shunneth effects of hourlong blackout=20 March 21, 2001=20 By JIM RADCLIFFE The Orange County Register=20 Ken Ackerman, owner of ABC Ice House in Laguna Niguel, checks on his frozen= =20 inventory during Tuesday morning's rolling blackout. The ice managed to=20 endure the hourlong power outage Photo: Jebb Harris / The Register ? ? Ken Ackerman didn't sweat much when a blackout struck his Laguna Niguel ice= =20 business at 10:30 a.m. Tuesday.=20 The walk-in freezer at ABC Ice House held 8 tons of ice. And for an hour, t= he=20 temperature in there rose from 20 degrees to 45 degrees.=20 But very little melted.=20 Ackerman said most refrigerators can handle blackouts as long as outages ar= e=20 less than two hours.=20 "I think people are going to get used to one-hour blackouts and realize it'= s=20 not a problem,'' Ackerman said.=20 The blackouts actually were profitable for Ackerman.=20 An Irvine laboratory struck by a power outage bought 100 pounds of dry ice = to=20 preserve human tissue.=20 More blackouts through the summer could be a boon for the ice business - or= a=20 bust.=20 It could mean more ice sales -- or that his supplier has trouble filling hi= s=20 orders.=20 "It's going to be an interesting summer,'' Ackerman said.=20 "I have no idea if we'll make more or less.''=20 Traffic will be the biggest problem if blackouts continue, Ackerman said.= =20 On Monday, a nearby Costco that had lost power ordered 200 pounds of ice to= =20 keep its refrigerated goods cold.=20 But dead traffic lights and congested roads made it impossible to deliver t= he=20 ice before the outage ended. Costco canceled the sale.=20 "We pride ourselves on getting our deliveries made in an hour," Ackerman=20 said.=20 ---------------------------------------------------------------------------= --- ---------------------------------------------------------------------------= --- ----------------------------------------------------------------- Traffic officials are seeing red over blackouts=20 Battery backups are planned by several cities to aid confused drivers.=20 March 21, 2001=20 By HEATHER LOURIE The Orange County Register=20 Traffic backs up Tuesday at Crown Valley Parkway at Forbes Road in Laguna= =20 Niguel as drivers had to navigate their own way Photo: Jebb Harris / The Register ? ? Toby Tran approached an Aliso Viejo intersection and wasn't sure what to do= .=20 Ahead of him, the traffic signal was dark, a casualty of the rolling=20 blackouts that struck Orange County on Monday and Tuesday.=20 So Tran kept driving, smacking into an oncoming car at the corner of Aliso= =20 Creek and Enterprise.=20 "It just happened," a shaken Tran, 29, said from his Aliso Viejo home. "I= =20 tried to stop and I couldn't. There was no light. Nothing."=20 Tran's accident Monday afternoon, and several others like it, underscore on= e=20 of the most significant dangers looming in the threat of future blackouts.= =20 Traffic signals that fade to black when the power goes out, instead of=20 converting to flashing red, make wrecks far more likely because drivers=20 become confused and frustrated, traffic engineers and experts said Tuesday.= =20 "I didn't know what to do," said Tran, who was on his way to a high school= =20 jogging track. "Luckily I'm alive, but I'm very scared."=20 On Day 2 of Southern California's power outages, worried city officials=20 across Orange County hunted for ways to respond to paralyzed intersections= =20 when state regulators pull the plug.=20 "We need to be ready," said Hamid Bahadori, traffic engineer in the city of= =20 Orange. "This thing is only going to get worse in July and August."=20 One popular idea: installing emergency battery-backup units at traffic=20 signals to keep lights flashing red during blackouts. Several Orange County= =20 cities, including Irvine, Laguna Niguel and Orange, are already moving to= =20 install the devices as early as this summer.=20 "In our minds, (a flashing light) is a vast improvement over a blacked-out= =20 signal," said Dave Rogers, Laguna Niguel traffic engineer. On Tuesday night= ,=20 his city was expected to approve the purchase of the battery packs for all = 74=20 of its traffic signals.=20 "Timing, in this case, seems to be everything," Rogers said. "A lot of citi= es=20 had contemplated it. We just took it that extra step."=20 John Thai, an Anaheim traffic engineer, cautioned that cities need to do=20 adequate research and testing before they launch into such projects.=20 "There is nothing that is foolproof," Thai said. "All this is new territory= ."=20 Some cities are also considering rolling out temporary stop signs and sendi= ng=20 police officers to more intersections.=20 Although the state's vehicle code requires motorists to treat dead traffic= =20 signals like a four-way stop, motorists often blow through the intersection= s,=20 police said.=20 "It's dangerous," said Tustin police Lt. Mike Shanahan, after several=20 near-wrecks in his city during Monday's outages. "People are not very good = at=20 reacting to changes in their conditions.=20 "Flashing red is something that catches your eye. It's a warning that=20 something is amiss, but the absence of all lights is worse."=20 RELATED STORIES=20 =01=07 How to contact your Representatives =01=07 'Current' events =01=07 The iceman shunneth effects of hourlong blackout =01=07 Powerless, again =01=07 Alternative power producers cut back or shut down as payments from b= ig=20 utilities lag =01=07 O.C. saves its energy -- for blaming others =01=07 Blackout readiness on agenda ---------------------------------------------------------------------------= --- ---------------------------------------------------------------------------= --- ------------------------------------------------------------ Alternative power producers cut back or shut down as payments from big=20 utilities lag=20 That is a factor in blackouts=20 March 21, 2001=20 By HANH KIM QUACH The Orange County Register=20 Every megawatt of electricity counts in this deregulated energy market -=20 including the five megawatts generated from the Olinda Alpha landfill in=20 Brea.=20 The methane-burning plant is producing only 3.3 megawatts now because=20 Southern California Edison owes it $1.5 million and cranking up to full pow= er=20 is no longer a priority, said Martin Quinn, executive vice president of=20 Ridgewood Power, which runs the plant.=20 "We're doing maintenance now when we ordinarily wouldn't do it. Because we'= re=20 not being paid, it was a good time to cut back,'' Quinn said.=20 That scenario has been playing out across the state in the past two weeks a= nd=20 was a major factor in Monday's and Tuesday's blackouts.=20 Those who provide electricity through alternative means - burning methane o= r=20 wood chips, or using cleaner-burning technology with traditional fossil fue= ls=20 - are not being paid for what they sell to the big utilities. So they eithe= r=20 can't afford to produce energy or see little incentive to do so.=20 On Monday, their absence from the statewide electricity grid created a=20 1,300-megawatt shortfall -- enough to power 1.3 million homes.=20 Taking that much power offline meant that any burp in the system would put= =20 the state under the minimum amount of electricity needed to avoid blackouts= .=20 When one conventional Southern California plant went down because of a=20 transformer fire Monday, the blackouts began.=20 "If all of California's (alternative) generators were operating yesterday a= nd=20 today, rolling blackouts would have been avoided,'' Quinn said Tuesday.=20 Within the next couple of weeks, as the weather warms and alternative energ= y=20 producers continue to try and operate without money, California could see= =20 twice as many of those producers go offline, further increasing the potenti= al=20 for blackouts, said Jan Smutny-Jones, executive director of Independent=20 Energy Producers.=20 The alternative energy producers, which provide about a third of the state'= s=20 energy, are deemed so crucial that Gov. Gray Davis wants the Public Utiliti= es=20 Commission to order the utilities to pay them. As drafted, though, the orde= r=20 would only include payment on future sales; it doesn't address existing deb= t.=20 The Legislature has been working since January to halve the rates that=20 alternative producers charge utilities and to require utilities to pay for= =20 November's energy by April 1. But that bill is still moving through the=20 Legislature.=20 Small plants threaten Edison with bankruptcy=20 Smutny-Jones said that if the small generators are not paid promptly, sever= al=20 will attempt to force Edison into bankruptcy, probably within a week.=20 Unlike the large natural-gas generators that have been paid by the state=20 Department of Water Resources, alternative energy producers are locked into= =20 contracts with utilities. Collectively, Pacific Gas & Electric and Edison o= we=20 alternative energy producers about $1 billion.=20 PG&E has paid about 15 cents for each dollar it owes.=20 "Obviously, they're a source of generation, and looking at how much load ou= r=20 customers need, they're a source that has provided energy,'' said Jon=20 Tremayne, Pacific Gas & Electric spokesman. "We've been trying, in good=20 faith, to make payments on energy.''=20 But Edison has not paid any money. Edison's alternative energy director, La= rs=20 Bergmann, said the company will not pay until larger reforms are made in ho= w=20 the producers' rates are calculated.=20 But the company recognizes that its nonpayment is causing problems.=20 "To the extent that there are hundreds of megawatts that are idled here, it= =20 just exacerbates the (energy) problem. ... They're facing similar problems = to=20 what we faced - they don't have sufficient (income) coming in the door,''= =20 Bergmann said.=20 Plants go into mothball mode=20 Millenium Energy in Kern County is owed $40 million total by PG&E and Ediso= n.=20 On March 1, the company shut down both of its coal and petroleum coke-burni= ng=20 plants and doesn't plan to bring them back up until it is paid.=20 Millenium's plants, which use a special technology to reduce emissions,=20 generate 150 megawatts of energy.=20 "We've gone into mothball mode; our machinery just sits there on cold=20 standby,'' said President Mike Hawkins. "We've been delivering free electro= ns=20 to the system in the hope that the system would resolve itself. But we can'= t=20 do that anymore."=20 One biomass plant in Lassen County has scaled back from 31 megawatts to=20 eight. Burney Forest Power burns wood chips to produce energy and has only = a=20 couple weeks' supply of chips left.=20 "When you don't even know what you'll get paid, it's hard to say, 'Let's go= =20 out and get a bunch of fuel,''' said Milt Schultz, the plant's general=20 manager.=20 "The sad thing is, (the state) really can't afford to lose us.''=20 ---------------------------------------------------------------------------= --- ---------------------------------------------------------------------------= --- -------------------------------------------------------- O.C. saves its energy -- for blaming others=20 March 21, 2001=20 By RICHARD CHANG The Orange County Register=20 Darkened stores were forced to turn away customers, as stock manager=20 Bridgette Kelly, left, does here at a Linens 'n Things in Costa Mesa. The= =20 store closed for 45 minutes Tuesday morning Photo: Michael Kitada / The Orange County Register ? ? Orange County residents are making efforts, large and small, to conserve=20 electricity as they face rolling blackouts and surging energy bills.=20 Reactions to the early spring crisis - with blackouts throughout the state= =20 Monday and Tuesday - are ranging from confusion to rage.=20 Many residents have taken practical steps, such as turning off lights they'= re=20 not using, waiting until off-peak hours to do their laundry and opening=20 windows instead of using air conditioning.=20 "My house is full of Philips energy-saving light bulbs," said Ray Rutledge,= =20 48, of Buena Park. "Our light bill has dropped 7 1/2 percent. We use=20 low-voltage outdoor lighting. We've got an energy-saving thermostat. It's s= et=20 back to 65 (degrees) in the wintertime."=20 Kim Wilson, who lives in an unincorporated area of Orange County near Santa= =20 Ana and Tustin, said he has cut down on lighting in his house and has reduc= ed=20 by half the time his pool cleaner runs. Still, his energy bill remains abou= t=20 $400 a month.=20 "I don't know what ... to do," Wilson, 57, said. "We've cut back."=20 Wilson added that he is not pleased with the way government or the energy= =20 companies have handled the crisis.=20 "I think it's disgusting. It's such political garbage. Who was it that made= =20 these decisions? Who got us into it?"=20 'TRYING TO CONSERVE'=20 Jenny Hann, 60, of Costa Mesa said her workplace has devised an emergency= =20 plan for conservation and future blackouts.=20 "We're definitely trying to conserve as much as we can," the bank=20 administrator said. Hann expressed frustration with the energy companies.= =20 "When you see these executives that have been running the show and the mone= y=20 they're making, it's bothersome," she said.=20 Jennifer Souto, 27, of Tustin said even though she's a stay-at-home mother,= =20 she keeps the lights off all day. She doesn't use her air conditioning,=20 either.=20 Souto said she was locked out of her house for 90 minutes Monday because a= =20 blackout cut power to her garage door. She says she's not sure who to blame= .=20 Paul Finch, 38, of Westminster blames Edison and Gov. Gray Davis.=20 "I don't believe info I get from Edison or from our illustrious governor,"= =20 Finch said. "There's more to it than how they've represented it."=20 ---------------------------------------------------------------------------= --- ---------------------------------------------------------------------------= --- --------------------------------------------------- Blackout readiness on agenda=20 O.C. companies braced for outages Tuesday in different ways. Not all were= =20 struck, but they felt the effects.=20 March 21, 2001=20 By TAMARA CHUANG The Orange County Register=20 In case of a power failure Tuesday, the Fluor Corp. in Aliso Viejo stocked= =20 elevators with homemade blackout kits, filled with cookies, flashlights and= =20 bottles of water.=20 "They're in the elevators, although we've been told not to use the=20 elevators," said Lori Serrato, a company spokeswoman. "We're using the=20 stairwells, waiting for our time of darkness."=20 Tales of anxious preparation were more common than actual blackouts for=20 Orange County businesses Tuesday.=20 Edison told some companies, as special power users who've agreed to cut bac= k=20 when asked, to expect to do so. Conexant Systems Inc. got a warning from=20 Edison and immediately shut down air conditioning and equipment not in use,= =20 and stopped production. The blackout never came.=20 Kingston Technology Co., when notified by Edison on Tuesday morning,=20 broadcast the warning on the company intercom. The company also e-mailed=20 employees a guide explaining the blackout.=20 "It's already affected productivity. We've been busy getting all our e-mail= s=20 out before it happens," said Heather Jardin, a spokeswoman for the Fountain= =20 Valley computer memory maker.=20 Kingston still had power by day's end, but in an emergency, the company's= =20 manufacturing plants revert to Kingston's own power generators, Jardin said= .=20 Heart valve maker Edwards Lifesciences turned on its backup generators=20 Tuesday morning, "because of the potential for there to be a blackout in ou= r=20 area," said company spokesman Scott Nelson. But (as of 3:30 p.m.) the=20 blackout didn't materialize, Nelson said.=20 At the regional office in Irvine, Verizon Wireless implemented conservation= =20 efforts, such as motion sensors that shut off lights after 30 minutes of=20 inactivity, and separate heating and air conditioning units on all floors.= =20 Some of the company's cell sites in Orange County and Los Angeles did lose= =20 power Monday and Tuesday, but they automatically switched to backup battery= =20 sources.=20 Other companies - PacifiCare, ICN Pharmaceuticals, Beckman Coulter and=20 Allergan - said they took precautions, turning out some hallway lights and= =20 communicating safety procedures to employees.=20 Disneyland, Ingram Micro in Santa Ana and Western Digital Corp. in Lake=20 Forest all were prepared.=20 But none reported blackouts by day's end.=20 Some county businesses did get hit.=20 Businesses along the 900 block of South Coast Drive - including 14 stores a= t=20 the Metro Point shopping center in Costa Mesa - went dark about 10:20 a.m.= =20 "All of a sudden it was dark," said Henry Gonzalez, manager of Boudin Baker= y.=20 "We ran out of coffee. We couldn't bake anything. We tried to accommodate a= s=20 best as we can."=20 Other stores simply closed during the blackout, frustrating shoppers.=20 "We walked over to (Marshalls) and it was dark and there was a sign on the= =20 door that said 'Due to the blackout, we're closed,'" said shopper Roberta= =20 Allison, a West Virginia tourist. "Don't they warn people here? Do they jus= t=20 whack the power off?"=20 Marshalls employees escorted customers out of the store when the power went= =20 out. Other stores, including Nordstrom Rack and Best Buy, were not affected= .=20 Across the street from the center, employees spilled out of office building= s=20 cheering and waving their hands in victory as power outages forced them to= =20 halt work.=20 "Lots of people just walked out of the office to run errands," said Amy=20 Bateman, a loan officer at Capital Funding Group in Costa Mesa.=20 She said her office building, at 940 South Coast Drive, went dark for about= =20 70 minutes. Like dozens of others in the building, she was working at her= =20 desk when the computers and lights went dark.=20 "We've just been sitting around. We can't do anything," said Bateman.=20 The blackout hit other businesses on Monday.=20 Buy.com employees spent their hour without power using their wireless=20 Blackberry pagers to answer and send e-mail.=20 The Crazy Horse Steakhouse in Irvine lost power after the lunch rush, said= =20 Donna Mulkey, the restaurant's manager. Since the broilers remained hot, th= e=20 cooks kept cooking and the customers kept eating. When they finished, waite= rs=20 calculated the bills by hand.=20 At Broadcom Corp. in Irvine, the power went out just before Rep. Christophe= r=20 Cox was to tour the facility.=20 "It struck me as particularly ironic," Cox told members of the House=20 subcommittee on energy and air quality Tuesday, that Broadcom's co-founder,= =20 Henry Samueli, "spent the hour before the meeting using a letter opener to= =20 open his paper mail and sitting by the window so he could get some sunlight= =20 to read."=20 Cox, R-Newport Beach, told the panel, which was holding a hearing on=20 California's electricity crisis, that "the entire company could not functio= n=20 during this period of time and the same was true for more than a million=20 people," he said. "It's a Third World experience in California."=20 Register reporters Chris Farnsworth, Dena Bunis, Bernard Wolfson, Nancy Lun= a,=20 Eric Johnson, Elizabeth Aguilera and Jennifer Hieger contributed to this=20 story.=20 ---------------------------------------------------------------------------= --- ---------------------------------------------------------------------------= --- ----------------------------------------------- Calif To Order Utils To Pay Small Generators Up Front-Gov 03/21/2001=20 Dow Jones Energy Service=20 (Copyright (c) 2001, Dow Jones & Company, Inc.)=20 SACRAMENTO, Calif. (AP)-- California regulators will order the state's two= =20 largest utilities to pay small, independent power generators in advance, a= =20 move Gov. Gray Davis hopes will bring a quick end to the blackouts that=20 darkened California this week.=20 Davis accused PG&E Corp. (PCG) unit Pacific Gas & Electric Co. and Edison= =20 International (EIX) unit Southern California Edison of taking in money from= =20 customers while failing to pay the generators, known as qualifying=20 facilities, which produce up to one-third of the state's power. As a result= ,=20 he said, the utilities are partly responsible for this week's blackouts.=20 "It's wrong and irresponsible of the utilities to pocket this money and not= =20 pay the generators," the governor said at a Capitol news conference Tuesday= =20 evening. "They've acted irresponsibly and immorally and it has to stop."=20 The state lost about 3,100 megawatts, or enough electricity to power 3.1=20 million homes, on Tuesday from alternative energy plants that say they can'= t=20 afford to keep operating because the utilities haven't paid their bills in= =20 weeks. The utilities, which are near bankruptcy, owe the QFs about $1=20 billion. Pacific Gas & Electric has made partial payments.=20 As reported by Dow Jones Newswires, Southern California Edison met with=20 representatives of the governor Tuesday to discuss plans to begin making=20 partial payments to the QFs. Pacific Gas & Electric , which called Davis'= =20 statements "inappropriate and unjustified," said it has informed the QFs an= d=20 the governor's office that it plans to begin paying the QFs in full going= =20 forward.=20 Davis said the PUC planned to issue an order next week directing the=20 utilities to prepay future bills to the QFs.=20 Edison and PG&E say they have lost more than $13 billion since last June to= =20 climbing wholesale electricity prices, which the state's 1996 deregulation= =20 law prevents them from passing on to ratepayers. California has been spendi= ng=20 about $45 million a day since January to buy power for the utilities'=20 customers, but hasn't included QF-generated power in its purchases.=20 Keepers of the state's power grid were cautiously optimistic that Californi= a=20 might get through Wednesday without another day of rolling blackouts after= =20 two idle plants were returned to service. A Stage 1 power alert, the mildes= t=20 of three forms of alerts, was called around 6 a.m. Wednesday as power=20 reserves fell to around 7 percent.=20 About a half-million customers were hit by Tuesday's blackouts, which snarl= ed=20 traffic and plunged schools and businesses into darkness from San Diego to= =20 the Oregon border. Tuesday's outages began at 9:30 a.m. and continued in=20 90-minute waves until about 2 p.m., when the ISO lifted its blackout order.= =20 They were blamed for at least one serious traffic accident.=20 The blackouts were caused by a combination of problems, including=20 unseasonably warm weather, reduced electricity imports from the Pacific=20 Northwest, numerous power plants being shut down for repairs and the loss o= f=20 power from QFs.=20 Meanwhile, a leading lawmaker on energy issues said the PUC may soon have t= o=20 raise rates by about 15% to cover the state's costs and its utilities' bill= s.=20 "My sense is that people will appreciate having some certainty and being ab= le=20 to plan for it," said Assemblyman Fred Keeley. "They don't have to like it,= =20 but I think they'll appreciate it."=20 Davis has said he is confident the utilities and the state can pay their=20 bills without further rate increases.=20 ---------------------------------------------------------------------------= --- ---------------------------------------------------------------------------= --- ----------------------------------------------- PG&E Says It Is Negotiating With Qualifying Facilities 03/21/2001=20 Dow Jones Energy Service=20 (Copyright (c) 2001, Dow Jones & Company, Inc.)=20 (This article was originally published Tuesday)=20 =20 LOS ANGELES -(Dow Jones)- PG&E Corp. (PCG) unit Pacific Gas and Electric Co= .=20 said Tuesday it is offering small generators, or "qualifying facilities",= =20 prepayment of $200 million per month so they will have the funds to return = to=20 the state power grid.=20 But high level sources at the qualifying facilities who are involved in the= =20 negotiations said PG&E's proposal is incomplete and doesn't address the iss= ue=20 of past due payments.=20 The sources said PG&E had discussions with some qualifying facility operato= rs=20 last week regarding the plan and it wasn't accepted at that time.=20 About 3,000 megawatts of power from qualifying facilities, or QFs, have bee= n=20 off the state's grid since Monday because the generators weren't being paid= =20 by utilities and couldn't afford to continue operating. The QFs unavailable= =20 power was partly responsible for Monday and Tuesday's statewide rolling=20 blackouts.=20 Also Tuesday, California Gov. Gray Davis will hold a press conference to=20 discuss progress made in negotiations with the QFs to revise their contract= s=20 with the state's two nearly-bankrupt utilities so that the utilities pay le= ss=20 for power.=20 Edison International (EIX) unit Southern California Edison also said Tuesda= y=20 it intends to make partial payments on an ongoing basis to some QFs.=20 Edison executives met with Gov. Gray Davis' negotiating team Tuesday to=20 discuss how and when SoCal Ed can begin to make payments, and a spokesman= =20 said they hope to have a plan in a matter of days.=20 Pacific Gas & Electric Co. has made partial payments of about $51 million t= o=20 the QFs it contracts with, but owes much more. Edison owes the QFs hundreds= =20 of millions of dollars and hasn't paid the QFs since November. Together, th= e=20 two utilities owe QFs about $1 billion.=20 PG&E said it has been collecting about $400 million per month from ratepaye= rs=20 to pay QFs and other generators with which it has bilateral contracts, the= =20 state grid operator for spot power purchases, and costs of its own=20 generation.=20 The average combined bill for those costs exceeds $1.4 billion per month,= =20 PG&E said.=20 "This mismatch between revenues and costs requires tough choices. Since the= re=20 isn't enough money in rates to cover all these costs, the Public Utilities= =20 Commission decision on how this $400 million will be allocated going forwar= d=20 will determine our ability to make advance payments to QFs," said Gordon R.= =20 Smith, the utility's president and CEO.=20 The PUC is responsible for implementing the legislation which allows the=20 state to buy power and will decide how much of utilities' ratepayer revenue= =20 will go to the state for power purchases and how much will go to the=20 utilities.=20 For several weeks, a number of QFs have taken their generating units offlin= e=20 because they can no longer afford to buy fuel needed to run their units.=20 QFs supply California with one-third of its total power supply.=20 PG&E and SoCal Ed have almost $13 billion in purchased power undercollectio= ns=20 because they cannot collect full costs from customers protected by a=20 state-mandated rate freeze.=20 -By Jessica Berthold, Dow Jones Newswires; 323-658-3872;=20 jessicaberthold@dowjones.com=20 -(Jason Leopold contributed to this article.)=20 ---------------------------------------------------------------------------= --- -------------------- Wednesday, March 21, 2001=20 By Dave Todd=20 dtodd@ftenergy.com=20 U.S. Energy Secretary Spencer Abraham declared this week that the Big Apple= =20 is on the verge of being bitten hard by power cuts and rising energy prices= . Delivering the keynote address at the U.S. Chamber of Commerce's national= =20 energy summit in Washington Monday, Abraham said, "California is not the on= ly=20 state facing a mismatch between supply and demand," what with "electricity= =20 shortages predicted for New York City and Long Island this summer" and low= =20 capacity margins threatening electricity reliability elsewhere across the= =20 country. But how likely is it that New Yorkers will face blackouts of the= =20 sort confronting Californians?=20 Not very, says energy trade specialist Edward Krapels, managing director of= =20 Boston-based METIS Trading Advisors. Krapels, a consultant helping major=20 Northeastern utilities, such as Consolidated Edison, design market-hedging= =20 programs, adamantly decried what he said are facile comparisons between=20 conditions in New York and California, there being "more differences than= =20 there are similarities" between those two industrial cornerstones of the=20 country's economy in respect to energy security management.=20 "First of all, New York has a more varied portfolio of energy generation=20 sources than California," he said. California has hydro, nuclear and gas, b= ut=20 when it lost a lot of hydro, the state needed gas to pick up the slack, and= =20 the "capacity just wasn't there." In New York's case, the state has oil and= =20 coal still in the mix and its overall dependence on gas is much lower than= =20 California's, Krapels added.=20 New York avoids making same mistakes Portfolio diversity is one pillar of any effective plan to help New York=20 avoid the same errors made in redesigning California's marketplace. New=20 York's Independent System Operator (ISO), in a new report warning that the= =20 state is at an "energy crossroads" in terms of its capacity adequacy in the= =20 immediate future, argues that a concerted effort is required to arrest=20 declining in-state generation capacity reserve margins, and a strategy must= =20 be put in place, whether or not new generation comes on-line, in accordance= =20 with current anticipated scenarios.=20 A measure of New York's essential difficulty is that, between 1995 and 2000= ,=20 statewide demand for electricity grew 2,700 MW, while generating capacity= =20 expanded by only 1,060 MW. With no major new generating plants in downstate= =20 New York fully approved, the gap is expected to continue to widen. To avoid= =20 "a replication of California's market meltdown" the New York ISO calculates= =20 the state's daily generating capacity needs to grow by 8,600 MW by 2005, wi= th=20 more than half of that located in New York City and on Long Island.=20 Expressing concern this may be too big a burden for the current bureaucrati= c=20 process to bear, the ISO wants to see a state-appointed ombudsman named to= =20 help would-be merchant power plant investors plow through red tape.=20 "Increasing New York's generating capacity will also lessen the state's=20 escalating and risky reliance on out-of-state sources of electricity," the= =20 ISO added. "Since 1999, New York State has been unable to cover its reserve= =20 requirements from in-state sources."=20 Not everyone agrees with that analysis, insofar as it argues for circling t= he=20 wagons inward. Some analysts believe the ultimate solution lies not in tyin= g=20 in more inwardly dedicated power, but in expanding the marketplace by=20 breaking down inter-jurisdictional barriers. In any case, New York energy= =20 regulatory authorities and those responsible elsewhere in the U.S. Northeas= t,=20 such as PJM (Pennsylvania-New Jersey-Maryland) Interconnection and the New= =20 England Power Pool, are in vastly better shape in terms of "cross-border"= =20 cooperation than California and its neighbors in that efforts are being mad= e=20 among various authorities toward developing an integrated regional=20 electricity market. In California, by contrast, the state's focus=01*for=20 example, in the case of new gas-fired power plant development=01*has been t= o=20 ensure dedicated supply to the California market alone, rather than on a=20 regional marketplace.=20 The New York ISO's new broad-based analysis of market-restructuring needs= =20 argues that the relatively stronger health of its reformed environment is= =20 "due in large part to the ability of New York's utilities to enter into=20 long-term power contracts."=20 What needs to be done most, it says, is to move aggressively to build some = of=20 the more than 29,000 MW of "proposed new generation in the siting pipeline.= "=20 In the meantime, the 30,200 MW of electricity New Yorkers used on a peak da= y=20 last summer shouldn't be eclipsed on too many days this coming summer (give= n=20 early long-range weather forecasts). Demand, however, is expected to increa= se=20 at an annual average rate of up to 1.4%.=20 So while New York City, the rest of the state and adjacent parts might=20 breathe easy this year, it could be a brief rest from the fray. Meanwhile, = a=20 4% shortfall is still being planned for this summer that is not yet provide= d=20 for, as authorities hurriedly seek to arrange new generation plants around= =20 Manhattan, on Long Island and even on barges offshore.=20 One way or another, whether it is the weather or the politics of siting new= =20 energy facilities, it's going to be a hot time in the city.=20 Long-term solutions hit brick wall Meanwhile, attempts at longer-term solutions continue to run into trouble.= =20 Last week, Connecticut state regulators came out against a proposal to run = a=20 new underwater cable under Long Island Sound that Hydro-Quebec subsidiary= =20 TransEnergie U.S. Ltd. wants to build to pump more juice into Long Island= =20 Power Authority's load pocket. Despite strong promises from TransEnergie to= =20 be diligent in avoiding damage to oyster beds in Long Island Sound, the=20 proposal failed to convince authorities, who were persuaded the pipeline=20 project could lead to diversion of electricity from Connecticut.=20 In similar fashion, private companies wanting to build 10 small independent= =20 power plants and temporary generators offshore New York City are running in= to=20 intense opposition from environmental groups and citizen organizations=01*s= ome=20 of whom have taken their cases to the state assembly in Albany.=20 The David vs. Goliath nature of such controversies has further alerted ener= gy=20 companies to the difficulties of addressing complex energy supply issues th= at=20 may ultimately devolve to people not wanting things in their backyard,=20 regardless of what the alternative might mean to their fellow citizens or t= he=20 greater public good.=20 But suddenly, in New York, California's troubles=01*while still distant in = their=20 intensity=01* may not be so far away. By some estimates, this summer's bill= s for=20 Consolidated Edison customers could be up as much as one third or more over= =20 last year's charges.=20 Letting the time slip when it comes to building new infrastructure isn't=20 going to make the pain go away.=20 =20