Message-ID: <27480330.1075860361888.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\All documents
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








