Calif. Extends Power Alert, States Tackle Crisis February 2, 2001 9:41 pm EST

By James Jelter

SAN FRANCISCO (Reuters) - California power operators extended the state's high power alert late on Friday, confronting residents with the 21st consecutive day of possible blackouts, after governors from 10 western states gathered in Oregon to tackle the region's energy crisis.

State power officials extended through midnight Monday a critical "Stage Three" emergency, the highest level they can issue, amid warnings that electricity reserves were again hovering within only 1.5 percent of available supplies.

The California Independent System Operator (ISO), which manages most of the state's transmission grid, earlier in the day said it did not anticipate ordering blackouts on Friday, having likely lined up enough electricity to squeak through the day.

"We look good...we believe we've secured enough power for today, but we're still operating at very thin margins," an ISO spokeswoman said.

Fridays typically see a drop in power use as schools and offices shut for the weekend.

But running that close to the edge means the sudden loss of just one large power plant could force operators to shut down entire neighborhoods to avoid a widespread collapse of the grid.

The state's 34 million residents have been barraged almost nonstop since December by dire energy warnings and urgent calls for conservation, with electricity demand overwhelming what the state's aging electrical system can provide.

SPREADING ENERGY CRISIS

But California is not alone. Energy woes are being felt throughout the west, where rapid population growth, robust economies, and few new power plants strike a common theme.

Short supplies, soaring fuel costs and growing demand have all come to a head, driving western wholesale electricity prices to about 10 times they levels the fetched just a year ago.

The economic impact has been alarming, pushing up power rates for homes and businesses by anywhere from 10 percent to 80 percent across the West, a move economists say could easily derail the region's economic engine -- with repercussions that could be felt throughout the entire U.S. economy.

Seeking solutions to this widening crisis was at the heart of Friday's meeting in Portland, Ore., between state and federal officials, with newly-appointed Energy Secretary Spencer Abraham representing the Bush Administration.

Abraham was accompanied by Curt Hebert, the new chairman of the Federal Energy Regulatory Commission (FERC).

Oregon Gov. John Kitzhaber, hosting the meeting, was joined by his counterparts Gov. Gray Davis of California, Gary Locke of Washington state, Dick Kempthorne of Idaho, Jane Hull of Arizona, Tony Knowles of Alaska, Judy Martz of Montana, Kenny Guinn of Nevada, Mike Leavitt of Utah and Jim Geringer of Wyoming.

They faced a withering array of problems.

CORE PROBLEMS

California, given its voracious appetite for electricity and the chaotic results of its early push to deregulate its energy market, has been teetering on the edge of blackouts since December, going briefly over that edge twice last month.

The Golden State also relies heavily on power from neighboring states, none of which has built enough new generation or transmission lines to keep pace with the West's rising energy requirements.

The situation turned even more critical this winter due to a severe lack of snow and rain in the Northwest, which depends on hydropower for 75 percent of its electricity and has been a key source of emergency power for California these past few months.

Late Thursday, the Northwest River Forecast Center, a Portland, Ore.-basedfederal agency linked to the National Weather Service, estimated the January-July flow of water through the vast Columbia River basin at only 63 percent of normal, down from 68 percent in its previous estimate just two weeks ago.

Natural gas, another major source of power in the West, has also been in tight supply, pushing generation costs through the roof in states like California, where gas-fired turbines account for about a third of all in-state power generation.

Most industry analysts warn it will take at least two years to balance supply and demand in the western power market, despite a headlong rush to promote power plant construction and energy conservation.

Sorting out the financial mess it has created for the region's utilities and consumers could take even longer.

-- Swissrose (cellier@azstarnet.com), February 03, 2001