TRuth dawns slowly Filed: 01/25/2001

By TODD S. PURDUM

N.Y. Times News Service

LOS ANGELES — California is long used to fires, floods, droughts, earthquakes, riots, mudslides and mockery from most of the other 49 states and the world. But no problem in more than a century of statehood can quite compare to the electricity crisis gripping the Golden State.

As California endures its ninth straight day of an official power emergency with no easy end in sight, things have come to this: The 35 million residents of the nation's most populous state and the world's seventh-largest economy are being urged to watch the Super Bowl in huddled groups to avoid rolling blackouts at the hours of peak demand.

The truth has dawned only gradually that California, the epicenter of the nation's booming high-tech economy, is subject to the episodic daily failure of a vital piece of its modern infrastructure that would not seem surprising in Bangladesh, but still feels mostly surreal here.

"It's not just an economic story," said Kevin Starr, the state librarian and author of a highly regarded series of histories of the California experience, who said that even the devastating San Francisco earthquake and fire of 1906 was not so daunting.

"It's a cultural and imaginative story. Once again, Californians have to be alerted to the fact that they have to earn California, that it doesn't come for free. Massachusetts knows that. New York knows that. Any place where it snows knows that. Californians have to learn that again and again."

This was not supposed to be the time for that lesson. A decade after a brutal recession and a series of natural disasters that felt like biblical plagues, California has been on a roll, with a $5 billion surplus in state coffers, record low unemployment, resurgent optimism and predictions of phenomenal growth. The state's economy grew at 6 percent last year and pronouncements that the California Dream was dead gave way to warnings that the challenge of the new century would be managing plenty.

In fact, it is growth, at least in part, that has fueled the crisis. Demand for electricity outpaced an outmoded generation of power plants, while a botched experiment with partial price deregulation and longstanding environmental opposition combined to create disincentives to build new ones or create cheaper wholesale prices through competition. Instead, wholesale electricity prices have spiraled out of control, pushing the state's two major private utilities, which have been barred from raising retail rates, to the brink of bankruptcy. "You have a first world economy that's suddenly been plunged into a third world economic environment," said Jack Kyser, chief economist of the Los Angeles County Economic Development Corp. "There were some early warning signs, but we were probably too busy reading our own press clippings to pay attention."

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-- Martin Thompson (mthom1927@aol.com), January 25, 2001