Tucson, Arizona Monday, 5 February 2001

Calif. utilities blocked plant construction By Chris O'Brien KNIGHT RIDDER NEWSPAPERS

SAN JOSE, Calif. - The state's three largest utilities blocked attempts to build more power plants six years ago despite a key state commission's prediction that they were needed because California's demand for electricity would begin to soar.

At the time, the utilities called those forecasts of increased demand - since proved frighteningly accurate - outrageous. They appealed to the federal government, which overruled the state's efforts to increase the supply of electricity. To settle their dispute with the state, the utilities then chose to pay energy companies more than $100 million not to build new plants.

That battle was fought primarily by Southern California Edison and San Diego Gas & Electric Co., which insist those plants would make little difference in the present energy crisis. But critics - and even one PG&E Corp. executive - say that if those 1,400 megawatts had come on line in 1998 as planned, they would have eased the current energy crunch and perhaps even have helped the state avert costly rolling blackouts.

But the impact of the utilities' actions also goes well beyond the loss of that electricity. The battle over those plants derailed the state's process for monitoring energy needs and for ensuring that enough power plants are built. When demand did surge, it was no one's job to pay attention.

By the time the state's process for approving new power plants got back on track after deregulation in 1996, the state had already fallen too far behind when shortages began forcing rolling blackouts last month.

"The fact of the matter is that San Diego Gas and Electric and Edison went out of their way to make sure these plants didn't get built," said Jan Smutny-Jones, executive director of the Independent Energy Producers. "And there's no question in my mind that if those plants had gotten built, they would be making a significant contribution to keeping the lights on in California."

President Bush and energy companies are fond of saying that California failed to build any power plants for more than a decade because of red tape and out-of-control environmentalists.

Closer to home, the three big utilities try to deflect blame by claiming there was a surge in demand for electricity that nobody could have predicted.

Neither claim is true.

California stopped approving major power plant projects in 1986 after a flood of them were built in the early 1980s. In addition, during peak demand, the state could buy as much as one-third of the power it needed from its more sparsely populated neighbors such as Arizona.

But by 1992, the California Energy Commission, the agency that licenses and approves new power plants, saw those conditions changing. Population in neighboring states was rising fast, leaving less electricity to sell to California. With projections that the state's recession would end in the mid-1990s, California's population and economy were expected to boom in the latter half of the decade.

Edison officials deny there is really an electricity shortage today. They believe the root cause is unscrupulous energy traders who are shutting down some plants to create a shortage and drive up prices.

"There's no correlation in the market between the price being charged and the supply," said Bob Foster, an Edison executive. "Withholding is going on in this market."

http://www.azstarnet.com/star/today/10205RPOWER.html

-- Martin Thompson (mthom1927@aol.com), February 05, 2001